India’s Public Health Expenditure-A Tale of Too little for too long
With the onset of the second wave of COVID-19, India is the new hot spot of COVID-19 — with ‘health infrastructure in a shambles’ and health chaos insight with the shortage of beds to medicines to oxygen to plasmas. Among other factors, this health crisis tells us a tale of too little health expenditure incurred by the respective governments for too long which was so essential for building resilient health infrastructure for the country.
Though human development was at the core of our planning after independence yet during the last seven decades i.e. from the inception of the first five-year plan in 1951 not much has been done to improve the health infrastructure in the country. Neither quantity nor quality of health infrastructure and services could be ensured due to low public spending on the health sector. A close perusal of the pattern of central plan allocations made to the health sector from the First to Tenth Five Year plan clearly shows that during the first three plans the allocations stood at 3.3%, 3%, and 2.6% respectively of total plan investment outlay. However, in the remaining plans, it varied between 1.6% during annual plans of 1990–91 and 1991–92 to 2.31% in the Ninth Five-year plan. In the Tenth plan once again there was a decline in central plan outlay to 2.09% (of total plan investment outlay).
So far as India’s public expenditure on health as a percentage of the GDP is concerned, it was as low as 0.8% in 1981. It increased to 0.92 percent of GDP in 1989–90. In the post-reform period, it began with 0.83 % of GDP in 1991–92, marginally increased to 0.89% in 1992–92. But by 1997–98, there was a downslide to 0.76 percent (Joshi, 2006). In the New Health Policy (NHP) 2001, there was a proposal to raise it to 2 percent of GDP. However, even after a decade and a half i.e. in 2016–17, the heath expenditure in India stood at just 1.28% of GDP which was lower than that of low-income countries (1.57 % of their GDP) classified by the World Bank and nowhere near the goal set in NHP, 2001.
With $16 per capita expenditure on health, India was trailing far behind many countries with Universal Health Coverage (UHC) like the USA ($8078), Norway ($6366), and Switzerland ($6175). Even small countries like Brunei Darussalam (in South East Asia )which are advancing towards universal health coverage through health system transformation reported per capita expenditure of $599 on health and were far ahead of India in per capita health spending.
A 137% increase in health and wellbeing expenditure announced in this year’s budget was a welcome step .What is worrisome is high out-of-pocket expenditure on health in India. India is among the 10 top nations with the highest out-of -pocket-expenditure (OOPE). The pledge made by the government of India to raise the public spending to 2.5% of GDP into health by 2025 keeping in line with NHP, 2017 needs an upward revision now in the backdrop of the health crisis triggered by the second wave of Corona. There is also an urgent need for more private sector participation in the health care sector to complement the efforts of the government (given the low tax-GDP ratio). Even though human development was at the core of our planning and reforms, yet allocations made to the social sector as a whole and particularly to the health sector remained low during the last seven decades due to a lack of political commitment.
The COVID-19 pandemic has exposed the fragility of our health infrastructure. There is an urgent need for building a resilient health system with private sector participation in India. Huge investment is required for building additional hospitals, ensuring the quality standards, supplying adequate equipment, providing training and retraining to doctors, nurses, health workers ( even for handling emergencies like COVID), and also for ensuring them decent working conditions along with their safety.
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