15th May 2024 (10 Topics)
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Rise in Public Health Spending Due to States, Not Centre
Context
Public spending on health in India has historically remained low. However, recent trends indicate a rise in public health spending, inching close to 2% of the GDP. However, attributing this rise solely to the Union government might not be accurate, as much of the increase is driven by states, not the Centre.
Public Health Spending in India: A Comparative Perspective
- Low Spending: India has always spent a little more than 1% of its GDP on healthcare, which is low compared to many countries. According to the budget estimates for fiscal year 2020, about 1.35 percent of India’s GDP was spent on public health.
- International Comparison: Bhutan’s spending on health was 2.5 times more than India’s while Sri Lanka’s was three times more. Many BRICS nations spent 14-15 times more than India.
Increase in Public Health Spending: Role of the States
- States’ Contribution: The increase in public spending on health in recent years, particularly during the COVID-19 pandemic, can be attributed to the States and Union Territories. The States have sustained the increase post-COVID-19 as well.
- Centre’s Contribution: In contrast, the Union government’s spending on health as a percentage of GDP, which increased moderately during the pandemic, has decreased post-pandemic.
Decline in the Share of Resources Transferred to the States
- Trend: The Union Health Ministry has been transferring a lower share of its resources to States in recent years. The share came down to little more than half within the first three years of the National Democratic Alliance government and declined consistently to reach a new low of 43% in FY24 (Budget Estimates).
- Implications: This trend reflects increased centralisation of financial resources on health, a subject which largely falls within the domain of States.
National Health Mission (NHM) and Government-Funded Health Insurance Schemes (GFHIs)
- NHM: Launched in 2005, the NHM was a crucial intervention by the Union government. But expenditure on the scheme has mostly remained stagnant or has come down in the last seven years.
- GFHIs: The Modi government’s emphasis on Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (PMJAY) is visible in its spending patterns. A look at the expenditure on various GFHIs such as PMJAY shows a steady increase in expenditure.
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