Health Budget: A moderate rise with no bold initiative

February 01, 2017 07:35 pm | Updated 08:01 pm IST

Customers watch Union Budget 2017-18 at an electronics showroom in Bengaluru on Wednesday.

Customers watch Union Budget 2017-18 at an electronics showroom in Bengaluru on Wednesday.

The Economic Survey of the Government of India, submitted to the Parliament yesterday, reminds Indians that as a nation the achievement in health outcomes has been a mixed bag. On a global comparison matrix, the country had done ‘reasonably well’ in life expectancy at birth while ‘exceptionally well’ in fertility decline. Whereas, when compared with core indicators of health outcomes, such as, Infant Mortality Rate (IMR) and Maternal Mortality Rate (MMR), India has a lot to catch up. A weak delivery system is seen as the primary reason for poor health outcomes. While this may be partly true in most states, what the survey glosses over is the persistent underfunding by the government.

Public funding of health sector remains at 1.2 percent of GDP, with Central government spending constituting a third of overall government funds. The Union Government’s allocation to health schemes, in the last five years have witnessed steady decline, in real terms. The health sector suffered the brunt of underallocation and few other policy changes that were effected on account of implementation of Fourteenth Finance Commission recommendations. As the centre’s tax devolution to states was sought to be accelerated from 32% to 42%, a sharp and significant deceleration in Central govt. allocation to states through health schemes was also effected since 2014. Moreover, as the society route was practically closed, the central government is currently routing funds through treasury channels. This change has caused enormous amount of difficulty for frontline health facilities to obtain adequate funds in time and to deliver services.

Against this backdrop, and amidst all round criticism and concern raised by the Health Ministry in recent days, the Union Budget 2017-18 has sought to reverse this trend by stepping up allocation from Rs. 39,888 crores (revised estimate during 2016-17) to Rs. 48,880 crores, with a nominal rise of 23%. Nearly half of additional funding to Health Ministry is allocated to the Ministry’s flagship program - National Health Mission - from Rs. 22,598 crores during 2016-17 to about Rs. 27,131 crores in 2017-18.

The Union Budget outlined an ambitious action plan to eliminate Kala-Azar and Filariasis by 2017, Leprosy by 2018, Measles by 2020 and even more ambitious target to eliminate Tuberculosis by 2025. How realistic is the action plan given the challenges the country faces from such infectious diseases? Are allocation of public funds matched realistically to meet the target and follow action plans? And how would the government deal with patients accessing care from private sector for TB cure? Such desirable action plan in the past, whether National Urban Mission or Non-communicable diseases, are yet to see light of the day for its implementation in any significant way. Unless substantial public resources are set aside to match disease profile and strengthen health system, targets will tend to be elusive. And such targets need to be aligned with other health related goals. The Union Budget 2017-18 is equally silent about the National Health Policy which is languishing for the past couple of years, which is expected to outline health goals, targets and strategies.

The proposed transformational Goods and Services Tax (GST) which is being planned to be rolled out this year, is expected to accelerate growth and produce revenue buoyancy. A higher fiscal space must translate into larger allocation to health and social determinants, including nutrition, sanitation, etc.. While it is desirable and commendable to impose sin tax and at a higher rate, would there be a guarantee for a sustained and stepped up allocation for health sector in future? Given that the fiscal space over the years have widened significantly, with a current tax-GDP ratio at 17% of GDP, health and related sectors must receive adequate attention.

The idea of Universal Basic Income (UBI) has come to occupy policy discourse. Would it see the light of the day in near future? Would UBI be used as an alibi for closing down welfare schemes in India or co-exist with existing schemes? In order to provide a minimum of UBI, the Survey predicts that it may require 4-5% of India’s GDP. And for a Universal Health Coverage (UHC) to be implemented, the minimum required resources are to the extent of an additional 1.5-2% of GDP. Would the incipient vision of Universal Health Coverage be buried before its birth? While the Union Budget did not address these questions, this year’s Economic Survey articulates the need for a UBI as it is likely to eliminate leakages and exclusion errors, which are considered the weakness underlying India’s delivery system till now. The Union Budget is equally silent about the Universal Health Assurance Scheme, which the Finance Minister indicated in his 2016-17 budget speech. Finally, demonetisation, which was seen as a key game changer, for it sought to mop up public funds, increase fiscal space, and thereby step up allocation to welfare schemes, the Union Budget comes as a dampener in fulfilling its desired objectives.

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