November 17 2019
Budgtet 2012: Fiscal deficit checks big hike
29 February 2012

Budgtet 2012: Fiscal deficit checks big hike in health allocation

The government had promised to step up spending on health to 2.5% of GDP in the 12th Plan, but is likely to allocate a modest 13%-15% jump in this year's Union Budget due to a resource squeeze caused by slowing growth. 

While Prime Minister Manmohan Singh is keen to widen healthcare coverage and ensure better medical facilities, the Planning Commission has indicated that the health ministry's allocation could be around Rs 27,000 crore for 2012-13, a jump of 13%. It was Rs 24,000 crore last year. 

A high-level review held by the Prime Minister's Office recently has firmly fixed India's health budget at 2.5% of GDP - a target mentioned by the PM during a recent speech at a function to mark India's success in eradicating polio. 

The 12th Plan (2012-17) targets an increase over current spending that adds to 1.4% of GDP. The PMO has asked the Plan panel to allocate adequate resources to achieve this target, said an official press release. 

The health ministry had hoped to receive around Rs 40,000 crore during 2012-13, given the government's ambition to universalize healthcare, improve and expand the primary health centre network and provide free medicines in public hospitals. These expectations have been hit by the sub-7% growth that hurt revenue collections and UPA-II's social welfare programmes. 

But officials expect major allocations of the 12th Plan to begin flowing in from next year. "The allocation for the first year of the 12th Plan was expected to be less. It is only to support existing healthcare programmes. The chunk of the expected 12th Plan budget will start coming in from 2013-14," an official said. 

Sources said "as against India's Rs 90,000 crore health budget for the 11th Plan, we expect Rs 3 lakh crore in the 12th Plan." 

The PMO said on Wednesday, "The Prime Minister has emphasized the need for increased outlay on health sector during 12th Plan so that adequate funds are made available for the sector. He has also stated that though funds for the health sector will not be a constraint, there is a need to create adequate capacity at the Centre and the states to meaningfully absorb the increased outlay." 

The official release did point to the crucial role of the states that are to account for two-thirds of the planned spending. "As health is primarily a state subject, the outlay of states for health would be critical in achieving this target. The Planning Commission may motivate states to allocate more funds for the health sector." 

The Plan panel's high-level expert group on universal health coverage had first proposed increasing the health budget to 2.5% of GDP by 2017, and to at least 3% of GDP by 2022. The group had said, "Even if we assume that the combined public and private spending on health remains at the current level of around 4.5% of GDP, this will result in a five-fold increase in real per capita health expenditures by the government from around Rs 650-700 in 2011-12 to Rs 3,400-3,500 by 2021-22." 

It added, "Increased public expenditures, in our estimate, will lead to a sharp decline in the proportion of private out-of-pocket spending on health - from around 67% today to around 33% by 2022." 

India devotes among the lowest proportion of total public spending to health - at or below 4.4% of total government spending between 1999 and 2009, according to WHO. Only nine countries (out of 191) devoted a smaller share of government spending to health than India. 



Related Stories