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.

UPA's Public Health Performance

UPA’s all flagship programs are under stress. During their previous tenure the UPA formulated their strategy and had 3 to 4 years for the various flagships to build their foundation. But we see that success has eluded them, especially in the social sector arena of health, education and welfare. The National Rural Health Mission attempted to do what the Minimum Needs Program did way back in the eighties. The MNP succeeded in creating the rural health infrastructure – the PHCs and subcentres - as per the 1981 National Health Policy to support the goal of Health For All by 2000 AD. This even pushed the public health spending upto 1.6% of GDP, the highest ever for the country. While the physical infrastructure was in place, the human resources, medicines, equipment etc were far from adequate and failed the strategy. And then we were subjected to SAP and the macroeconomics that followed spelled disaster for the social sectors, halving the public health spending from the MNP peak to a mere 0.8% of GDP. To stem this collapse of the public health system the NRHM was launched with a target of pushing public health spending to 2 to 3 percent of the GDP by making architectural corrections.

At the end of their first tenure the UPA managed to take public health spending barely to 1 percent of GDP, no where close to their target. The rural public health system continued to suffer from the same malaise as earlier – not enough doctors and nurses, inadequate medicine supplies, poor maintenance etc. What was worse is that the reasonably robust urban public health system also began to collapse with rapid private sector growth and expansion, including the support of private health insurance. Thus the inadequate public investment in health during the previous UPA regime actually led to the boom of private healthcare which had now jumped to 5.5% of GDP. Since private insurance covers barely 2% of the population, most of this expenditure is out-of-pocket indicating a huge burden on households who often had to sell assets or take loans for their hospitalization needs. Thus the UPA government failed to make any significant impact in the public health domain.

The failure is both political and bureaucratic because there is a complete lack of political will to push radical reforms or the architectural changes the NRHM strategy document talked about as well as the inadequate capacity of the bureaucracy to facilitate the structural changes. During the period of the UPA regime we saw in Thailand a major transformation where social insurance and increased public financing catapulted Thailand to the status of a universal access country assuring equitable access to basic healthcare for all. If Thailand could do it given a very similar historical trajectory to that of India then why can’t UPA facilitate the same for India? The answer lies in viewing the entire health system, both public and private, as a single system and creating a regulatory mechanism and a financing strategy of a single-payer instrument and to accommodate that under a single umbrella. Well the first 100 days of the second UPA regime does not show any inclination towards that end. Hence civil society has a long struggle to get the UPA on track to achieve the goals of universal access to basic healthcare.