Budget and the Health expenditure

The finance minister announced in her Union Budget speech for 2023-24 that the total central government budget for health (excluding research) will be approximately Rs 86,175 crore ($10 billion), or approximately Rs 615 for each citizen. This represents a 2.7% increase over the previous fiscal year and is lower than the rate of inflation.

Current Government Health Spending

  • Current health spending is lower in low-income countries than in middle-income countries: India currently spends about Rs 8 lakh crore ($100 billion) on health, or about 3.2 percent of its GDP. This is significantly less than the average health spending share of GDP, which is around 5.2 percent of the Lower- and Middle-Income Countries (LMIC).
  • Health expenditure in India in comparison to other countries: The government (Centre and states combined) spends approximately Rs 2.8 lakh crore (approximately $35 billion), or roughly 1.1 percent of GDP. Compare this to government health spending in countries such as China (3%), Thailand (2.7%), Vietnam (2.7%), and Sri Lanka (1.4 per cent).

How health expenditure affects people especially poor?

  • A day’s hospitalisation is estimated to cost Rs 2,800 at a public hospital. It costs Rs 6,800 at a private hospital.
  • Financial impact on poor households is disproportionate: A greater proportion of a poor household’s disposable income is taken away than from a non-poor household, widening the gap between the two.
  • The effect of health-care spending on employment and income: When a working member of the household becomes ill, she or he is frequently forced to leave active employment, and their primary source of income disappears just as they require additional funds for treatment.
  • Assets must be sold or mortgaged to cover treatment costs: To cover treatment costs, households must frequently sell or mortgage productive assets such as land and cattle.
  • Health expenditure burden on vulnerable populations: The poor, elderly, and sick are already at a disadvantage, and the burden of health expenditure exacerbates this.
  • Falling into poverty as a result of health-care costs: This reduces their ability to recover even further. According to the WHO, catastrophic health expenditures force 55 million people into or deep into poverty each year.

Areas where increased government spending could help in the short term

  • Both communicable and noncommunicable diseases should be prioritised: Despite the fact that noncommunicable diseases (NCDs) cause more than half of the total disease burden and this proportion increases in both rural and urban areas, the National Health Mission allocates less than 3% (Rs 717 crore) to NCDs compared to communicable diseases and reproductive and child health services.
  • The focus of public health and primary health care is on rural areas: urban areas have inadequate primary care infrastructure, even though secondary and tertiary health care services are better. For example, immunisation coverage in urban India is now lower than in rural India. A third of the country now lives in cities, and more resources are needed to improve health in these areas.
  • Health research has been neglected for far too long: the Department of Health Research’s allocation in this year’s budget is Rs 2,980 crore, unchanged from last year. Spending Rs 20 per Indian is incompatible with the sector’s need for innovations and technologies. The majority of the resources provided to the Indian Council of Medical Research are used to support a large payroll of scientists, resulting in poor output.

Way forward

  • Maximizing India’s Potential: India is on the verge of a tremendous opportunity. Quality education and health care for the 26 million children born each year and the 65 percent of the population under the age of 35 could help India move forward.
  • Harnessing the Demographic Dividend: While India’s working-age population is growing, urgent action is required to capitalise on the demographic dividend and potentially become a developed country within a generation.
  • Adopting a Competitive Funding System for Health Research: India, like other successful countries, should implement a competitive grant system for government-funded health research to encourage top-tier research. The Wellcome Trust/DBT-India Alliance is an example of a successful system.

@the end

The health (and education) of Indians is the most important determinant of what the country can achieve during the next 25 years of Amrit Kaal. We must find ways to both find more money for health, and also more health for the money to ensure that all Indians achieve their true potential.

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