Saturday, March 5, 2011

India Budget 2011-12 – A Brief Comment

The 2011-12 budget overall shows that there is further compression in public spending. There is a southward trend in the budget with the estimates indicating only a 13% nominal increase over the previous year and a decline in the budget estimate as a proportion of the GDP by more than 1% point to14% of GDP. This is happening despite the real growth rate being over 8%. Similarly tax revenues of the Central budget have stagnated around 10% of GDP. The Centre has failed to net in increased revenues from the growing national income. And the present budget does not give any indication that the Tax:GDP ratio will move northwards. Unless the latter happens we cannot expect public spending, especially for the development and social sectors like rural development, health, education, welfare, housing etc.. to grow significantly. Today public spending on health is a mere 1% of GDP when WHO recommends that it should be atleast 5%. The government over the last six years has not been able to move towards its own target of 3% of GDP for health. The share of the Central government in public spending for health is a mere 0.25% of GDP when as per the UPA target it should be 40% of 3% of GDP that is 1.2% of GDP or Rs. 86,400 crores at today’s prices.

In contrast to that the Central Ministry of Health allocation is only Rs. 30456 crores (including grants to states), short by Rs. 55944 crores as per commitment of UPA government. Of the Rs 30456 crores, Rs. 1700 crores or 5.5% of the Health Ministry's budget goes to HIV AIDS, which has been accorded a status of a separate Dept in this year’s budget; Rs 771 crores goes to Health Research, mainly ICMR and its institutions and Rs. 1088 crores to AYUSH. The Health and Family Welfare department gets Rs 26897 crores of which Rs. 16140 crores goes to NRHM and Rs. 5435 crores goes to the Central Government Hospitals and Medical Colleges and further Rs. 653 crores goes for healthcare of Central government employees under CGHS - a whopping Rs. 3628 per Central government employee in sharp contrast to about Rs. 500 per capita which all state and the Central governments together spend on healthcare for its citizens

Under NRHM some of the key allocations are Rs. 1238 crores for the various National Disease Control Programs like TB, Vector borne diseases, blindness. leprosy etc., Rs 3378 crores for Family Welfare, Rs. 240 crores for RCH, Rs 511 crores for routine immunisation and Rs. 664 crores for polio, and the Mission and RCH Flexipool gets Rs. 8776 crores. In addition NRHM also gets funds of Rs. 1784 crores under the NE special program and Rs. 247 crores under AYUSH.

So what does the above tell us. The overall spending on healthcare by government is certainly very low when we consider global standards. As a consequence the out of pocket burden for citizens, especially so of the bottom two quintiles is huge - about Rs. 3000 per capita. While within the Central budget the allocation to health ministry has increased by 21% over the previous year and gives the impression that health and other social sector programs are an important priority for the government. This is largely due to the political push under the flagship programs and is a good sign but when we look at actual expenditures then this optimism is belied. Actual spending in the social sectors like health and education are invariably 10-15% less than the budget estimates and often in the key programs like NRHM and Sarva Shiksha Abhiyan as also pointed out in the audits conducted by the CAG. This year for the first time the Central budget has included actual expenditure for 2009-10 and we see that for the Health Ministry the overall shortfall in expenditure as per the budget estimate was 8%, and 10% for the plan component of the budget, most of which goes as grants to state governments. However the surprise is (actual expenditures are still provisional) that NRHM shows an actual expenditure in excess of 17% (7% excess in plan expenditures), largely due to the RCH and immunisation programs and pumping in of non-plan resources (whopping increase from the Rs.72 crores in budget estimates to Rs. 1397 crores in actual expenditure) which certainly shows an increased commitment on part of the Central ministry of Health. Perhaps 2009-10 was the year for the consolidation of the NRHM program but this came as a cost to the medical care sector under the Ministry of Health, which means that public hospitals and teaching hospitals were neglected, their shortfall in expenditure being as much as 20%

To conclude, while the UPA government seems to be inclined towards strengthening the public health system by giving a larger weightage to the health sector in budgetary allocations, overall this is not enough because there is significant compression of overall public spending. The consequence is that this impacts public health spending and the neglect of the public health system continues.

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