Budget 2020

Budget may increase health outlay by 11%

Health Minister Nadda has sought funds to ward off the threat of non-communicable diseases.

Health Minister Nadda has sought funds to ward off the threat of non-communicable diseases.  

Ministry had sought $10 bn, likely to get $8.2 bn, say sources

India is poised to raise its public health spending by 11% in the annual budget next month, after rejecting the health minister’s demand for a much bigger increase to ramp up disease control, according to government sources and documents.

Health Minister J.P. Nadda sought a “bare minimum” budget of nearly $10 billion for 2018-19 — 33 % higher than last year — in a letter to the finance minister on Nov. 26, which Reuters has reviewed.

Mr. Nadda argued the funds were needed for expanding vaccination coverage and free drugs distribution, and also to ward off a growing threat of non-communicable diseases, such as cancer and diabetes, which killed 6 million people in India in 2016.

His request was not approved: the health budget is expected to rise by 11% to $8.2 billion, three government officials told Reuters. They declined to be named or be identified further as the discussions were confidential.

Pledge at risk

Prime Minister Narendra Modi’s government last year set a target of raising annual health spending to 2.5% of GDP by 2025, from 1.15% now — one of the lowest proportions in the world. The health budget this year will put that pledge at risk.

“What’s the point of having a (2025) GDP target? With this funding, it still looks like a herculean task,” said one of the officials interviewed.

The finance ministry declined comment, while the health ministry did not respond to requests seeking comment. The budget for the financial year ending March 2019 will be presented on February 1.

Shamika Ravi, a member of Mr. Modi’s economic advisory council, said she wasn’t privy to the final budget numbers, but described a $8.2 billion annual health budget as “not sufficient”.

“If we underspend on health, it will impact India’s overall GDP by lowering productivity in the long term,” said Ms. Ravi, who is also a research director at Brookings India.

Ms. Ravi however said she would continue to advise the government to allocate more funds for healthcare to achieve its 2025 GDP target.

Last year, the government intensified efforts to overhaul the public healthcare system. It capped prices of several medical devices to help the poor, ramped up screening of non-communicable diseases and, on top of that, also raised the federal health budget by more than a quarter.

But the health budget increase for 2018-19 will be lower as the government’s finances are stretched by slowing economic growth and tax collections that have lagged under a new sales tax regime, the officials said.

Collections under the new goods and services tax stood at $12.6 billion in November, the lowest since its introduction in July, which finance officials say have upset the government’s overall revenues and budget calculations.

In recent months, the government has said it wants to boost spending on sectors such as infrastructure, including ports and roads, to boost economic growth.

‘Tenfold return’

In his letter, Mr. Nadda made a case for a significant increase in his ministry’s allocation, saying investments in public health would eventually result in a “tenfold return for the economy”.

Low public health spending leads to “catastrophic” medical expenses for people, he wrote.

India’s overburdened health system remains plagued with an acute shortage of government hospitals in rural areas. In 2016, more than 1 million children died before turning five, the highest number for any nation in the world, a United Nations report said last year.

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Printable version | Feb 19, 2020 12:46:29 AM | https://www.thehindu.com/business/budget/budget-may-increase-health-outlay-by-11/article22466251.ece

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