Govt plans to trim health budget by 20 per cent

Over Rs 6k cr slashed from allocation for 2014-15 fiscal

The Narendra Modi government has decided to cut down the health ministry’s budget by about 20 per cent in the current fiscal, impacting some of the public health programmes.

According to health ministry officials, who spoke to an international news wire service, more than Rs 6,000 crore, or $ 948 million, has been slashed from the ministry’s budget allocation of around $ 5 billion for the 2014-15 financial year.

The cut, however, is not sudden and out of the turn. In the last three consecutive years, health ministry received less money than what was actually proposed in the budget.

Not only the revised estimate was lower than the budgetary estimate in 2013-14, 2012-13 and 2011-12, the cut was more than Rs 5,000 crore in the last fiscal. India has one of the world’s lowest public expenditure on health care and the regular budget cut is one of the factors crippling the health care sector.

Despite rapid economic growth over the past two decades, successive governments have
kept a tight rein on health care expenditure. India spends about 1 per cent of its gross domestic product (GDP) on public health, compared to 3 per cent in China and 8.3 per cent in the United States. The move reflects the Centre’s struggle to achieve its 2014-15 fiscal deficit target of 4.1 percent of GDP.

Dominated by private players, India’s health care industry is growing at an annual clip of around 15 per cent, but public spending has remained low and resulted in a dilapidated network of government hospitals and clinics, especially in rural areas.

One of the casualties could be derailment of an ambitious Rs 1.6 trillion ($ 25 billion) universal health care programme that Modi wants to launch to fulfil his electoral promise. The scheme aims to provide all citizens with free drugs and diagnostic treatments, as well as insurance benefits.