How healthy is the health budget?

The second inning of the Narendra Modi-led government was far from ordinary, marked by a series of devastations—from the pandemic to the subsequent lockdown and economic recession. The Covid-19 pandemic exposed the existing gaps in the country’s public health sector. The stunted growth of the public health sector due to infrastructural inadequacy suddenly became conspicuous. However, even during this crisis, the government’s fiscal commitment to the health sector was a mere 0.5% of GDP (September 2021).

While the finance minister announced big programmes, like the HPV vaccine, the allocation for the sector (including the Ministry of Health and Family Welfare and the Ministry of AYUSH) for FY 2024–25 stands at approximately Rs 94,000 crores, only a modest 1.69% higher than the previous years. The decline in budgeted expenditure for health with respect to the total budgeted expenditure of the central government is worrying; the health sector outlay has fallen over the years, from 2.66% in 2022–23 and 2.06% in 2023–24 to around 1.98% this year. Additionally, considering the inflation rate of 5.69% in December 2023, health spending in real terms has decreased. In fact, the budgeted expenditure for the two ministries is a meagre 0.27% of the GDP estimate for 2024–25.

The foundation of a robust public health system lies in strong and resilient primary healthcare. Although the budget allocated for the integrated national primary healthcare programme, the National Health Mission, has increased by 10% over the previous budget, it only represents a small increment of around 1.3% from the revised estimates for the year 2023–24.

A noteworthy announcement in this year’s budget concerns the expansion of the health insurance scheme, Pradhan Mantri Jan Arogya Yojna, to include ASHA and Anganwadi workers. However, the outlay has only increased by 4% from Rs 7,200 crores for 2023–24 to Rs 7,500 crores for 2024–25, raising questions about the adequacy of this extension. This year, the allocation for the Pradhan Mantri Garib Kalyan Package, an insurance scheme for healthcare workers fighting Covid-19, has been reduced to Rs 0.10 crore from an actual outlay of Rs 223.73 crore in 2022–23, effectively increasing the allocation only by 1%.

According to official data, drugs and medicine account for more than 40% of the out-of-pocket expenditure on healthcare. In the absence of effective drug price control mechanisms, a programme like Jan Aushadhi can bring some respite to citizens by reducing the burden of out-of-pocket expenditure on healthcare. However, expenditure on the Jan Aushadhi scheme has remained low over the years. In FY 2024–25, the allocation is around Rs 284.5 crore.

Health research has consistently received a raw deal and is around Rs 3,000 crore—a mere Rs 22 crore higher than the allocations last year and just about Rs 100 crore more than the revised estimates for 2023–24. Government-funded research can go a long way towards improving health outcomes, but it requires increased spending.

Lastly, the quality of expenditure is as important as its volume. According to the Controller General of Accounts data, the Ministry of Health and Family Welfare spent only 62% of the total budget by the end of the third quarter. The utilisation of funds under the capital account by the Department of Health and Family Welfare and the Department of Health Research stands at around 29% and 4%, respectively.

The health budget for 2024–25 does not inspire much hope for the public health sector. Although it is an interim budget effective until the new government is formed after the Lok Sabha elections in May, it holds immense importance. Viewing these promises in conjunction with previous budget announcements and expenditure pattern is crucial to gaining a comprehensive understanding of the government’s priorities.

(The writers are faculty at Azim Premji University)