Paltry Government Funding And Unplanned Expenditure

Upset India’s Health Sector

Nobel Laureate economist Prof. Amartya Sen, during his keynote address to the 52^nd World Health Assembly at Geneva, strongly argued in favour of promoting health for all to ensure development. Ironically, it is estimated that around 28 percent of the rural population and 20 percent of the urban population in India has absolutely no money to pay for healthcare services. India’s healthcare expenditure as percentage to GDP is merely about 4 per cent whereas one of the poorest countries like Burundi spends around nine per cent. As per World Health Statistics 2015, brought out by the World Health Organisation (WHO), per capita total expenditure on health in India (at average exchange rate) was 58 US dollars as compared to other developing countries like China ($367); Indonesia ($108); Malaysia ($418); Nigeria ($93); Philippines ($115), Sri Lanka ($88)and Thailand ($264).

 Despite adopting and upgrading the health policies from time to time (see my previous article at https://pradipsinterpretations.wordpress.com dated March 4, 2017), health and healthcare developments have never been priorities of the Indian state. While government expenditure on healthcare is abysmally low, there has been an uncontrolled growth of the unregulated private health sector which has been booming in the era of economic liberalization.

The healthcare delivery system in India is complex and overlapping. Broadly, it is delivered by the Central and the state governments. Considering the federal nature of the Constitution, the areas of operation have been divided between the Union Government and the State Governments. Seventh Schedule of the Constitution (Article 246) describes three exhaustive lists of items namely Union List, State List and Concurrent List. Public health and sanitation; hospitals and dispensaries are described in the State List (List – II). The items having wider ramification at the national level like population control and family welfare, medical education, quality control in manufacturing of drugs, etc. have been included in the Concurrent List (List – III). According to the Constitution, the central Government is concerned only with international health matters; assisting and coordinating State activities; establishing standards; promoting research; and professional education etc. Therefore, most of the health matters are reserved for the States and their health departments. The two Health Survey Committees (Bhore Committee, 1946 and Mudaliar Committee, 1961)   stressed upon greater power of the Central Government to coordinate the activities of the State authorities dealing with health. (Sometimes in future, a separate article may be published with more details of these health committees)

However, the Union Ministry of Health and Family Welfare is responsible for implementation of various programmes on a national scale in the areas of health and family welfare; prevention and control of major communicable diseases; and promotion of traditional and indigenous systems of medicines. The Ministry comprises the following two Departments –

1.      Department of Health and Family Welfare including National AIDS Control Organisation (NACO); and 

2.      Department of Health Research.

The Ministry of Health and Family Welfare also assists the states in preventing and controlling the spread of seasonal disease outbreaks and epidemics through technical assistance. The Ministry incurs expenditure either directly under Central Schemes through the offices of the Director General of Health Services (DGHS) and its various subordinate offices namely PHO / APHO; CDSCO; CGHS; ROHFN etc, or by way of grants to the autonomous / statutory bodies  and NGOs. The Ministry is also implementing several World Bank assisted programmes for control of AIDS, malaria, leprosy, tuberculosis and blindness in designated areas along with the 100% centrally sponsored family welfare programme. Therefore, the Ministry of Health and Family Welfare is supposed to play a vital role on the national efforts to enable the citizens to lead a healthy and happy life.

The ninety-third report on “Demands for Grants 2016-17” (Demand no. 42) of the Department of Health and Family Welfare, prepared by the department-related Parliamentary Standing Committee, was presented to the Rajya Sabha on 27^th April, 2016 and was also laid on the Table of Lok Sabha on the same day. A perusal of Demand No. 42 which pertains to the Department of Health and Family Welfare, reveals that there was a huge gap between the total approved Annual Plan Outlay 2016-17 (i.e. Budget Estimates) for the health sector and the actual fund allocation. For, plan and non-plan side put together the budget estimates was Rs 27606.35 crore and fund allocation was only of Rs 16254.55 crore resulting into a shortfall to the extent of Rs 11081.80 croe. (See Table: 1)

Table: 1                                                                                   (Rs. in crores)

	Demand Projected		Fund Allocated		Shortfall
	Plan	Non-Plan	Plan	Non-Plan	Plan	Non-Plan
Health	17962.50	7093.85	9100.00	5724.55	8862.50	1369.30
NACO	2550.00		1700.00		850.00
Total	27606.36		16524.55		11081.80

The 31-member Parliamentary Standing Committee with its chairman Prof. Ram Gopal Yadav, hence, noted in the report: “The major schemes to be adversely affected as a result of less allocation include among others, Pradhan Mantri Swasthya Suraksha Yojanja; Human Resources for Health and Medical Education; AIIMS, New Delhi and Tertiary care schemes. Almost all of these schemes have the objective of correcting the imbalances in availability of affordable and quality tertiary level healthcare in the country. Given the disturbing scenario in which availability of tertiary care is skewed towards private domain vis-à-vis public sector; and the costs of private tertiary care is prohibitive, these schemes which are oriented towards facilitating an equitable access to adequate and quality tertiary care and ensuring appropriate manpower mix of different categories of health professionals, assume added significance. Lack of expansion of public sector hospitals in proportion to population growth and health needs is making healthcare out of the reach of people, especially the poorer sections of the Country. Hence the role of the Government in this sector has to be increased substantially to provide adequate healthcare to needy.” (PART – B of the report)

Not only for the year 2016-17, the role of the Central Government in providing “adequate healthcare” has been marginalized throughout the 12^th five year plan period as reflected through the year-wise huge gap between the total approved outlay for the health sector and the actual expenditure incurred. (See Table: 2)

Table: 2                                                                                                             (Rs. in crore)

Years	12th Plan Outlay For Health Sector		Funds Allocated			Actual Expenditure Incurred
	75145.29		Plan	Non-Plan	Total	Plan	Non-Plan	Total
2012-13			6585.00	3596.00	10181.00	4145.43	4069.67	8215.10
2013-14			8166.00	4131.70	12297.70	4261.22	4653.59	8914.81
2014-15			8733.00	4813.45	13546.45	5645.36	5003.98	10649.34
2015-16			6250.00	5345.61	11599.61	6216.48	5128.92	11345.40
2016-17			10800.00	6020.92	16820.92
Total	75145.29		40538.00	23907.68	64445.68	20268.49	18856.16	39124.65

      

The Committee expressed its concern over the significant gap between the total Twelfth Plan approved outlays for Health sector and the sanctioned Budgets in the five years of the 12^th Plan Period (2012-13 to 2016-17). As against the total approved plan outlays of Rs. 75145.29 crore for Health Sector, the actual expenditure made by the Government till March 17, 2016 was Rs. 40,538/- crore which was only 53.95 % of the total quantum of funds recommended originally. How one can expect to achieve key health outcomes and objectives of Health Sector with only 53.95% of the approved outlays! According to the Committee, the Government, therefore, owes an explanation. (Paragraph no. 1.23; Part – B of the report)

When there was a substantial shortfall of the budgeted expenditure of the Department of Health and Family Welfare in Modi regime during 2014-15 and 2015-16; the Committee was constrained to observe that there was a shortfall in the Plan expenditure as compared to the Revised Estimates and it was to the extent of Rs. 1126.82 crore in 2014-15 and Rs. 1557.87 crore in 2015-16. During the first four years of the Twelfth Plan, out of allocated plan funds of Rs. 29,738.00 crore  only Rs. 20268.50 crore had been utilized as on 17.03.16, leaving a huge shortfall of Rs. 9469.50 crore in the plan expenditure.

Further, the Committee's scrutiny also reveals that substantial variations have occurred between the sanctioned budgetary provisions and the actual expenditure incurred by the Department under several heads of the Grants operated by it during 2014-15 and 2015-16. For example, despite the budgetary provisions of Rs. 197.75 crore and Rs. 294.78 crore obtained as Revised Estimates for "Strengthening/Creation of Paramedical Institute (RIPS/NIPS)" and "Upgradation of State Government Medical Colleges (PG seat)" during 2014-15, respectively, not a single rupee was spent under these heads. Similarly, the Department had obtained Rs. 87.65 crore as RE 2015-16 for Central Drugs Standard Control Organisation, but has spent only Rs. 55.11 crore as on 31^st March, 2016, thus registering unspent provisions of Rs. 32.54 crore. These instances portray an absence of a sound budgetary mechanism. It also gives an impression that the budgetary requirements are being projected on the basis of theoretical anticipation rather than on actual requirements. (Paragraph no. 1.27; Part – B)

The challenges of fund constraint coupled with financial mismanagement has created unhealthy situation in India’s health sector. 10% of illness episodes remain untreated in India. In absence of adequate public funding, approximately 60% of the rural and 70 % of the urban population in India utilize private facilities for healthcare. The rural population spends, on an average, Rs.5,636 for hospitalized treatment in a public sector hospital and Rs.21,726 at a private sector hospital. Moreover, inadequate health insurance opportunities are resulting into huge out of pocket payments of total expenditure on healthcare in India. According to National Sample Survey (NSS) data, over 80 per cent of India’s population is not covered under any health insurance scheme. The data also reveals that despite several years of the Centre-run Rashtriya Swasthya Bima Yojana (RSBY), only 12 per cent of the urban and 13 per cent of the rural population has access to insurance cover.

Since most of the healthcare expenses in India are paid out of pocket, rather than through insurance, this situation has led many households to incur Catastrophic Health Expenditure (CHE) which threatens a household's capacity to maintain a basic standard of living It is unfortunate to note that, over 35% of poor Indian households incur CHE which clarifies the dangerous state of health care system in which India is at the moment. Despite this detrimental scenario in healthcare management, the per capita government expenditure on health care in India is one of the lowest in the world. (See Table: 3)

Table: 3                                                                                                                  

	Total Expenditure on Health as % of GDP *	Per capita total expenditure on Health, (USD) #	Government expenditure on Health as % of Total Expenditure on Health *	Government expenditure on Health as % of Total Government Expenditure *	Out of Pocket Expenditure as a % of Total Health Expenditure**
India	3.8	61	30.5	4.3	58
Thailand	4.5	264	79.5	16.9	11
China	5.4	367	56.0	12.5	34
UK	9.3	3598	84.0	16.2	9
USA	17.0	9146	47.0	20.0	12

*World Health Statistics

**WHO Global Health Repository Accessed, Jan 2016

#World Bank health care expenditure for 2013

The quantum of Government’s expenditure on healthcare in India is around 1.2% of its GDP as against an objective of 2.5%.  The Union Budget 2017-18 has allocated 2.27% of the total Budget for overall healthcare expenditure. What would actually happen to this is a matter of discussion for the future. However, among the BRICS countries, the Government’s health care expenditure as percentage of total health expenditure is the lowest in India along with other parameters. (See Table: 4)

Table: 4                           (Source: Draft National Health Policy 2015)

Country	Total Health Exp. per capita (USD)  2011	Total Health Exp. as % of GDP  2011	Govt. Health Exp. as % of Total Health Exp - 2011	Life Expectancy at birth (years) 2012
India	$62	3.9	30.5	66
Brazil	$1,119	8.9	45.7	74
China	$274	5.1	55.9	75
Russia	$803	6.1	59.8	69
South Africa	$670	8.7	47.7	59

For last two and half decades or even more, vested interests from many quarters in India are trying hard to establish that the government should abstain from all welfare activities and should stop giving “non-profitable” subsidies to its citizens including withdrawal of expenditure in healthcare. A comparison with the most advance OECD countries may throw some light. (See Table: 5)

Table: 5                                    (Source: Draft National Health Policy 2015)

Country	Total Health Exp per capita (USD)  2011	Total Health Exp as % of GDP  2011	Govt. Health Exp as % of Total Health Exp - 2011	Life Expectancy at birth (years)  2012
India	$62	3.9	30.5	66
USA	$8,467	17.7	47.8	79
United Kingdom	$3,659	9.4	82.8	81
Germany	$4,996	11.3	76.5	81
France	$4,968	11.6	76.8	82
Norway	$9,908	9.9	85.1	82
Sweden	$5,419	9.5	81.6	82
Denmark	$6,521	10.9	85.3	80
Japan	$4,656	10.0	82.1	84

Inadequate government funding, unplanned expenditure, lack of administrative skills and, above all, the absence of political will have damaged the already moribund healthcare system in India. The state governments cannot deny their absolute failure in upholding the constitutional obligations entrusted to them, with public health being an item in the State List. We shall deal with this topic in future articles.

@pradipsinterpretations