Budget 2023: Will health sector get the due it deserves?

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It was in 2017 that the Narendra Modi government, through the National Health Policy, recommended increasing public health spending to 2.5 percent of the Gross Domestic Product (GDP) by 2025.

Despite its own recommendation and the chinks in the country’s healthcare system exposed by the COVID-19 pandemic, the public expenditure on health by the Union and state governments, however, has stayed at just about 1 percent.

In Union budget 2022-23, there was only a meagre 16 percent increase over the previous year, in the combined allocation for the ministries of health and traditional medicine (AYUSH), with a planned outlay of Rs 89,300 crore.

But experts say that while there may not be a significant hike in the health budget this year given the government’s commitment to further reduce the fiscal deficit, it is likely that the Centre will announce a flagship health scheme in the run-up to the 2024 general elections.

Healthcare spending pattern

Economist Pritam Datta, a fellow with the National Institute of Public Finance and Policy, pointed out that the 11th five-year plan had recommended a scaling up of government health spending to at least 2 percent of GDP by 2012.

He added that the 15th Finance commission recommended that health spending by state governments should be more than 8 percent of their budget and combined spending on health by the central and state governments together should be 2.5 percent by 2024-25.

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That, however, remains a far cry and only 34 percent of public spending on health is by the Union government, while sub-national governments spend 66 percent of total government expenditure on health in India as it is a state subject.

“Therefore, governments (Centre and states) need to expand their health budgets manifold,” said Datta, adding that the country’s overall public health infrastructure is grossly insufficient.

He pointed out that the 15th Finance Commission, too, has also acknowledged that irrespective of the ability to pay, Indians are increasingly availing healthcare from the expensive private sector.

“India, therefore, needs budgets to expand its public health infrastructure,” Datta said.

Focus on health infrastructure?

Public health activist T Sundararaman, expressing concern that the government’s expenditure on health has remained stagnant, said that in order to strengthen the core programmes on health, the investment in Ayushman Bharat Health and Wellness centres needs to increase exponentially.

“At present, these centres are under-resourced in terms of human resources and states may or may not be in a position to actually fill the huge gaps,” he said.

R Ramakumar, an economist who is associated with the Tata Institute of Social Sciences in Mumbai, also emphasised that it would be crucial to see if the government has identified weaknesses in the health system and is willing to put money into addressing them.

“I would look forward to seeing whether the government is inclined towards improving public health infrastructure or is willing to move more towards the insurance based system — that is a broad policy question,” he said.

Flagship health scheme under watch

Sundararaman, who is also attached with Jan Swasthya Abhiyan, pointed out that even though the government has been patting itself on the back for the Ayushman Bharat Pradhan Mantri Jan Aarogya Yojana, launched in 2018,  consumption under the scheme has so far been very limited.

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Nearly 50 crore of the poorest Indians are assured of a cashless hospitalisation benefit of up to Rs 5 lakh under AB-PMJAY, in empaneled hospitals across the country.

“So, it would be useful to see whether more money has flowed into the popular schemes last year, and whether that money has been utilised and what therefore is a projection for the coming year.”

Datta underlined that actual spending under the AB-PMJAY was just 50 percent and 42 percent of what was budgeted for PMJAY in 2019-20 and 2020-21, respectively.

Again, insufficient health infrastructure may be one of the reasons behind the low utilisation of insurance schemes such as AB-PMJAY.

‘Health sector needs more importance’

Shanay Shah, president of the Shalby group of hospitals, said that while health has been a priority sector for some time, it would be even better if it can be reclassified in the same category as agriculture (a National Priority Sector) for long-term lending from banks at lower rates.

Ramakumar said that given that general elections are to be held next year, it is possible that the government may announce a new health scheme this year.

“Even though there is going to be a budget before the polls next year, launching a scheme now and implementing it will help the government leverage it,” he pointed out.