One year into Pandemic, Why health does not figure into budget bucket, only 0.34% of GDP

Few days back of Finance Budget, Finance Ministry published economic survey which has a chapter titled “Health Care Takes Centre Stage. Unfortunately, despite all tall claims, health has not been given all attention which it deserves in ongoing worldly affairs.

As all eyes were set on the health budget because of health emergency we are facing this time. Contrary to the facts, that covid-19 infection has been somehow controlled, the faultlines of our health system has become more visible than ever in the past year.

Against such black backdrop of Indian Health System, a natural inclination was that Finance Minister of India will pay special attention on public health system. Finance minister Nirmala Sitharaman in her speech also emphasised a “holistic approach to health” that focuses on “strengthening three areas: prevention, curative and well-being”. She was much more focused mentioning about PM Atmanirbhar Swasth Bharat Yojna to be launched with the laudable objective of developing capacities at the primary, secondary and tertiary levels of healthcare.

As this scheme main focus is on strengthening healthcare infrastructure at all levels, with an emphasis on public health, seems to be in the right direction, its allocation is perhaps too late: Rs 64,180 crore over six years translates only to about Rs 10,700 crore per year. Making is clearer, that there is no budget line in the demand statement of the Department of Health and Family welfare on this new scheme, so it is not clear what this year’s allocation is either.

Overall, the health budget – as can be seen from the ‘Expenditure of Major Items’ statement of the Budget – has increased from Rs 67,484 crore (BE 2020-2021) to Rs 73,931.77 (2021-2022). While this is an increase of about 10%, the allocation for this year is in fact less than the revised estimates of 2020-2021: Rs 85,089 crore.
So, in effect, the plan is to spend even less than what is being spent in the current year – even as many have pointed out that the Union budget for health needed to be doubled this year, then increased consistently over the next 3-4 years, for us to meet our goals for public expenditure on health.

The 2021 Economic Survey makes a case for increasing public spending on health from 1% to 2.5-3% of GDP, as the National Health Policy (NHP) 2017 states. This is necessary to improve India’s poor standings on various indicators of health, such as share of OoPE, equitable and good quality access to healthcare, availability of infrastructure and human resources for health. For example, India currently ranks 145 out of 180 countries on quality of and access to healthcare, and 179 of 189 countries in prioritisation of health in government budgets.
Finance minister Sitharaman said that the budget outlay for health and wellbeing has increased 137% – giving the impression that the government has somehow bridged this gap. But look at the details of this increase, and you will see that this is not at all the case (see table below from annexure 1 in the budget).

This increase has a number of things not related to the Union budget on health. Of the Rs 2,23,846 crore, the expenditure on nutrition, water and sanitation – although important – can’t be accounted for as part of the health expenditure! Similarly, the Rs 35,000 crore announced for the COVID-19 vaccines is a one-time expense and is not included as part of the regular health budget.