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Budget 2021: Healthcare may finally get its due thanks to COVID-19

India has long been languishing at the bottom of the health-spending pecking order. The pandemic might significantly change the scene.

January 27, 2021 / 11:33 AM IST
Representative image: AP

Representative image: AP


The COVID-19 pandemic, one of the biggest health emergencies of our times, may well propel the Centre to significantly increase spending on public health in the coming fiscal. Finance Minister Nirmala Sitharaman has already spoken of a Budget like “never before” and hinted at an increased emphasis on healthcare in FY22.

India has long been languishing at the bottom of the health-spending pecking order, with the latest Oxfam report showing that the country's expenditure on health as a percentage of the total budget is the fourth lowest anywhere in the world.

In 2020-21, the budgeted spend for healthcare at Rs 67,112 crore was just about 1.5 percent of the country’s GDP. The Oxfam report showed that Indians routinely shell out more than 70 percent of health expenses from their own pockets, and only half the population in this country has access to even the most basic healthcare services. As per government data, India has just about 5.5 beds per 10,000 population and this is nearly a fifth of the global average.

Also Read: Healthcare sector allocation likely to go up by 40%

A Crying Need

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With the pandemic bringing all aspects of healthcare into sharp focus, healthcare spending needs a substantial boost. Even in 2020-21, our allocation on health remained a fraction of that on defence and infrastructure sectors, as the government continued to turn a deaf ear to persistent demands for a mega increase on healthcare spends. The allocation was only about half the sum demanded by the ministry of health and family welfare and just over 5 percent of the Centre’s total budgeted expenditure.

Now, two of the country's apex business chambers, the Federation of Indian Chambers of Commerce and Industry (Ficci) and the Confederation of Indian Industry (CII), have also demanded a substantial increase in India’s health budget. In its pre-budget recommendations, Ficci has said the government should spend an additional half a percent of the country’s GDP every year, for the next five years, on healthcare. And CII wants the government to almost double its healthcare spend in three years to 3 percent of GDP.

Time to Advance Targets

So will the Finance Minister listen to these pleas? As per the National Health Policy 2017, India was targeting an annual increase in its health expenditure to reach 2.5 percent of GDP by 2025, or in four years. Perhaps the time has come to advance this target. The only question is, where will the FM find the resources for such a mega expansion, and whether new levies are on the cards in a fiscally stretched year.

A parliamentary standing committee, which recently assessed the impact of the pandemic and the government’s response to it, also found fault with our historically low allocation to the health sector. In fact, the committee emphasised that the health ministry’s demand for funds for the next five years comes to a whopping Rs six lakh crore or nearly 10 times the amount allocated in FY21. The funds are to be used in setting up more medical colleges, expanding the scope of the National Health Mission and for post-COVID health sector reforms. For implementing a dedicated action plan to address the COVID-19 challenges alone, the ministry has sought upwards of Rs 65,000 crore.

Listen In: How govt can help healthcare sector become self-reliant post-COVID

The Standing Committee on Health and Family Welfare has said in its 123rd report that the Indian Public Health Association (IPHA), the Indian Association of Preventive and Social Medicine (IAPSM) and the Indian Association of Epidemiologists have all demanded an increase in public healthcare expenditure to “at least 5 percent of the GDP. The focus of increased health expenditure should be on primary healthcare and human resource and infrastructure strengthening rather than opening/strengthening tertiary care centres”.

No Better Time Than Now

The panel has said COVID-19 offered a window to revisit the country’s health policy and to strengthen the health sector, and this necessitates higher investment in creating permanent basic health infrastructure. A higher budgetary allocation will also shift the focus to Indian manufacturers and domestic supply chain of products, and this is the opportune time to boost healthcare infrastructure besides also pushing for greater technology deepening.

Not only are low budgetary allocations towards health a cause for worry but also the dismal actual disbursals in a pandemic year may have worsened the situation on the ground.

According to data from the Centre for Policy Research, just a fraction of the allocated funds had been released till November 2020 for the Pradhan Mantri Jan Aroyga Yojana (PMJAY). Against Rs 6,400 crore allocation, only about 16 percent or Rs 1,032 crore had been released.

PMJAY is a health insurance scheme aimed at providing access to quality inpatient secondary and tertiary care to poor and vulnerable families and reducing catastrophic out-of-pocket expenditures arising out of serious health episodes. The CFPR has said that advanced estimates may show lower utilisations of funds for several schemes under the health ministry as allocated sums were not fully made available to state governments.
Sindhu Bhattacharya is a journalist based in Delhi who writes on a range of topics in business and economy.
first published: Jan 27, 2021 11:33 am

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