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Govt should consider demanding higher budgetary allocations for health sector: Parliamentary Panel

Gireesh Babu, New Delhi
Thursday, March 23, 2023, 08:00 Hrs  [IST]

Given that the inflation rate is expected to be on higher side in the near term, the government should consider demanding for higher budgetary allocations for the health sector at the Revised Estimate (RE) stage, recommended a panel of parliamentarians which has looked into the demand for grants for the Department of Health and Family Welfare.

The Panel expressed that innovation in health is crucial for establishing an affordable and accessible healthcare delivery system, especially for a developing economy like India and the need of the hour is to recognise health as a key sector for economic as well as social development. It strongly recommended the Government to make health a priority and increase its investment in the health sector.

The panel observed that for the last five years, the budgetary allocations have always been less than the projected Demands for Grants for the Department and again reduced budgets were approved for the projected additional demands for funds at the RE stage.

For instance, the proposed budget estimate for the year 2022-23 was Rs. 93,299.75 crore, against which a Budget Estimate of Rs. 83,000 crore was approved. While the proposed RE was Rs. 83,812.16 crore for the year, the approved RE was of Rs. 76,370.40 crore.

For the year 2023- 24, the projected BE was Rs. 89,532.00 crore and the approved BE is Rs. 86,175.00 crore, which is a shortfall of Rs. 3,357.05 crore. Adjusting with the inflation rate of 5.5 % for the month of December 2022, the expected BE 2023-24 should have been Rs. 87,150.00 crore over BE 2022-2023.

“Public health plays an important role in facilitating economic development of the country, therefore, in view of inadequate and overstretched public health infrastructure; the investments in the health sector should increase. Given that inflation rate is expected to be on higher side in near term, the government should consider demanding for higher budgetary allocations for health sector at RE stage,” said the Department-related Parliamentary Standing Committee on Health and Family Welfare in its 143rd report on the demands for grants 2023-24 of the Department of Health and Family Welfare.

The Committee further observed that while the utilisation trend in the past five years of the Department has been satisfactory, in 2022-23, for the first time in five years the RE is lower than the BE of the Department.

The Department, till February 13, 2023 had spent 73.35% of the total allocated budget and 26.65% of the funds remain unspent.

The panel recommended the ministry of health and family welfare to cap its expenditure in the last month of the financial year as per the extant guidelines and strictly monitor the expenditure of funds in the last quarter of the financial year.

The Department need to nudge the States and hold discussions with the state representatives at regular intervals to ensure timely disposal of the pending issues and must make consistent efforts to ensure optimum utilisation of the allocated funds. Most of the schemes where funds remained underutilised were either due to delay/non availability of encumbrance free site or non-receipt of proposals from the states.

“The Committee believes that the states must also play a pro- active role and work in tandem with the Union government to ensure the robust implementation of the Schemes," it added.

The government health expenditure as a percentage of gross domestic product (GDP) is 1.28% for 2018-19 and this lags behind the National Health Policy target of increasing Government Health Expenditure to 2.5% of GDP by 2025.

“A close scrutiny of the Health Budget reflects the lack of priority assigned to health. The Committee observes that the health budget allocation trends over the years do not align with the ambitious target set in National Health Policy. The Committee is of the opinion that adequate health financing forms the pillar of a well-functioning health system which is crucial for reduction of Out-of-Pocket Expenditure (OOPE) in health. The pandemic further reaffirmed the need of a sustainable health financing ecosystem especially in tackling a sudden public health crisis,” said the Committee headed by Member of Parliament Bhubaneswar Kalita.

The Committee in its 126th Report on DFG (2022-23) had also recommended the Government for increasing its health expenditure to 2.5 % of GDP in the next two years and to 5% by 2025.

“However, with such stagnant allocation to health and the slow pace of increase in allocation, the goal of achieving the NHP target of health expenditure to 2.5% seems a distant dream,” said the Committee.

As per Economic Survey 2022-23, the total health expenditure as percentage to GDP was 2.1%, however, the expenditure on ‘Health’ includes expenditure on ‘Medical and Public Health’, ‘Family Welfare’, and ‘Water Supply and Sanitation'.

The Committee also recommended that only the Budget of the Union ministry of health and family welfare and States Health Budget should be exclusively considered under Total Health Expenditure.

The consequences of government intervention is visible in the declining trend of OOPE which has decreased from 64.2% in the year 2013-14 to 48.2% in 2018-19. However, 48.2% of OOPE in health is still a major deterrent to quality health care.

With a major chunk of the population that remains deprived of basic amenities, government health spending is the only means to gain access to affordable healthcare.

The Committee, accordingly, recommended the Government to follow the examples of High-Income Countries (HIC) where almost 70% of the expenditure on health is borne by the government.

The states have failed to fulfill the National Health Policy target of increasing the Health Sector spending to more than 8% of their budget by 2020. Appreciating that NCT Delhi and Puducherry spend 11.2% and 9.2 % of their total State Budget in the health sector, the Committee recommended that other states/UTs government should follow the same. The Union government must persuade the state governments to achieve the budgetary health expenditure to 8%.


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