Budget may increase health ooutlay by 11% 

Budget may increase health ooutlay by 11% 

 Context

India is poised to raise its public health spending by 11% in the annual budget next month, after rejecting the health minister’s demand for a much bigger increase to ramp up disease control, according to government sources and documents

Latest data (Source: World Bank)

Public health spending as a percentage of GDP

• 1% (1995)
• 4% (2014)

What has happened?

Health Minister J.P. Nadda sought a “bare minimum” budget of nearly $10 billion for 2018-19 — 33 % higher than last year — in a letter to the finance minister on Nov. 26

 Why, a higher outlay has been requested?

• Funds are needed for expanding vaccination coverage and free drugs distribution, and also to ward off a growing threat of non-communicable diseases, such as cancer and diabetes, which killed 6 million people in India in 2016

By what amount the outlay might actually be raised?

The health budget is expected to rise by 11% to $8.2 billion

Significance

The present government last year set a target of raising annual health spending to 2.5% of GDP by 2025, from 1.15% now — one of the lowest proportions in the world. The health budget this year will put that pledge at risk

 Why the budget increase will be on the lower side?

The health budget increase for 2018-19 will be lower as the government’s finances are stretched by slowing economic growth and tax collections that have lagged under a new sales tax regime

• Collections under the new goods and services tax stood at $12.6 billion in November, the lowest since its introduction in July, which finance officials say have upset the government’s overall revenues and budget calculations

India’s health system

India’s overburdened health system remains plagued with an acute shortage of government hospitals in rural areas. In 2016, more than 1 million children died before turning five, the highest number for any nation in the world, a United Nations report said last year

Why increased public health spending is necessary?

It is increasingly clear that emerging economies can benefit from allocating additional resources for healthcare and treating healthcare as an investment rather than a cost.

• According to CDC estimates, there is a $10 return on investment for every $1 spent on childhood vaccinations, of which Peru and China are good examples
• In fact, in 1971, China spent less than 2.5% of its GDP on healthcare, its life expectancy was less than 62 years and there was only one doctor per 1,100 people. Today, health expenditures have doubled to more than 5.5% of its GDP, and with it, its life expectancy has increased to more than 71 years.
• The successful model of performance-based financing being followed in Rwanda and its neighbouring countries is also worth emulating. This can be replicated and moulded to the needs and requirements of the health sector in India.