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Economic Survey 2020: Expenditure on healthcare continues to be flat

The combined Central and state governments spend on healthcare, as percentage of total expenditure had remained flat at 5.3 in last two consecutive financial years

January 31, 2020 / 07:40 PM IST
Representative Image

Representative Image

The spend on healthcare, as percentage of total expenditure, has remained flat at 5.3 percent in last two consecutive financial years, according to Economic Survey 2020.

The overall budgetary expenditure by Centre and states in FY20 budget estimates stood at Rs 60.72 lakh crores.

In terms of Gross Domestic Product (GDP) the government spend on healthcare is 1.6 percent in FY20 budget estimate a small rise from 1.5 percent in FY19.

Expenditure on health includes expenditure on medical and public health, family welfare and water supply and sanitation.

Primary healthcare accounts for 52.1 per cent of India's current public expenditure on health as per the National Health Estimates, 2016-17.


The National Health Policy - 2017 stated that health spend by government should be 2.5 percent of GDP by 2025.

The policy recommended to spend at least two third of Government’s health expenditure on primary healthcare, in addition to setting a target to reduce the proportion of households facing catastrophic health expenditure from the current levels by 25 percent by 2025.

Reducing out of pocket expenditure

Out of pocket expenditure on health is one of the biggest reasons for people falling into poverty in India.

As per the latest National Health Accounts (NHA) 2016-17, the out of pocket expenditure (OoPE) as a percentage of total health expenditure has declined from 64.2 percent in 2013-14 to 58.7 per cent in 2016-17.

The government was able to achieve the reduction in OoPE by combination of policy initiatives that includes launching Ayushman Bharat and price controls of medications.

Through Ayushman Bharat, the government aims to cover half to provide health cover to 10.74 crore poor and vulnerable families upto ` 5 lakh per family per year for secondary and tertiary hospitalisation. The government is planning to set up 150,000 setting health and wellness by 2022. It had already set up 28,005 such units.

Dichotomy on drug price control

The Economic Survey said the fixation of ceiling prices of medicines resulted in a total saving of Rs 12,447 crores to the public. This includes the saving of Rs 4,547 crores on account of fixation of ceiling price of coronary stents, Rs 1,500 crores on account of price fixation of Knee implants and Rs 984 crores on account of Trade Margin Rationalisation (TMR) on Anti-cancer drugs.

In case of cardiac stents, post price capping period over the period of two years, the Survey said it has been observed that there is 26 per cent increase in the sales of the cardiac stents in the Indian market.

“It has also been observed that indigenous manufacturers have benefited from the price capping of the cardiac stents as their share in the production has increased by 10 per cent in post price capping period,” the Survey added.

However the same Economic Survey contradicts saying that the regulation of prices of drugs through the DPCO 2013, has led to increase in the price of a regulated pharmaceutical drug vis-à-vis that of a similar drug whose price is not regulated.

"Our analysis shows that the increase in prices was witnessed for more expensive formulations than for cheaper ones and those sold in hospitals rather than retail shops, reinforcing that the outcome is opposite to what DPCO aims to do - making drugs affordable.," Economic Survey says.

Medical infrastructure

The doctor-population ratio in India is 1:1456 against the WHO recommendation of 1:1000. To address the shortage of doctors.

The government said it has embarked on an ambitious programme for upgradation of district hospitals into medical colleges.

In last 5 years, government said it has sanctioned 141 new medical colleges, and revised the norms for graduate and post graduate seats in medical colleges.

The maximum intake capacity at MBBS level has been increased from 150 to 250, the norms for setting up of Medical colleges in terms of requirement of land, faculty, staff bed strength etc have been rationalized.

"The Government operates Centrally Sponsored Scheme–establishment of New Medical Colleges attached with existing District/Referral Hospitals’ with fund sharing between Centre and States. As a result, the number MBBS and PG seats have increased by 27,235 and 15,000 respectively. These efforts would go a long way in addressing the shortage of doctors," the Survey said.

Through Pradhan Mantri Swasthya Suraksha Yojana (PMSSY), the government had augmented the tertiary healthcare capacity in clinical care, medical education and research in underserved areas of the country, under which AIIMS like institutions are built and Government Medical Colleges are upgraded by setting-up Super Speciality Blocks.

The Survey also mentioned the introduction of a common entrance test NEET-UG for admission to all MBBS courses including AIIMS and JIPMER.
Viswanath Pilla is a business journalist with 14 years of reporting experience. Based in Mumbai, Pilla covers pharma, healthcare and infrastructure sectors for Moneycontrol.
first published: Jan 31, 2020 06:37 pm
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