Union Budget 2018 unlikely to improve ‘ease of living’
That rural India was to be the focus of Budget 2018 was expected, indeed urgently needed. To this end, the finance minister’s budget speech made all the right noises. What is interesting, however, is the narrative of rural development that the government has constructed. Gone is the focus on jobs, skills, aspirations and empowerment. The rural economy is to be strengthened through greater government welfare intervention. Improved rural infrastructure (particularly sanitation, housing, roads) and—the showstopper of this budget—health insurance are the key focus. Achievements against these schemes are likely to frame the political message that the National Democratic Alliance (NDA) is going to take to the people in 2019. Important here is a clear admission that the primary political promise of this government—better jobs for an aspirational India—has failed. There is now a new promise that is being slowly constructed.
Equally significant is what the finance minister did not speak about in his budget. Given the emphasis on the rural economy, the obvious thing for the government to do to alleviate immediate stress would have been to increase public investment in rural infrastructure. In fact, in his speech, the finance minister states that spending more on rural infrastructure is a priority. However, for all the lip service paid to the rural sector in his speech, the budget for the ministry of rural development got a mere 4% increase in allocation. Importantly, Swachh Bharat, Pradhan Mantri Gram Sadak Yojana (PMGSY) and the Pradhan Mantri Awas Yojana (PMAY) saw no real change in budgetary allocation. In fact, allocations for Swachh Bharat and PMAY have fallen by 9% compared to revised estimates of the previous year. For the last three years, the FM has specifically mentioned the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)—spuriously claiming that the government had made the highest ever allocations to the scheme last year. It did not find place in the 2018 budget and importantly the scheme received no changes in allocation. MGNREGA has received an allocation of Rs55,000 crore in 2018-19 which is the same as the previous year’s revised estimate, despite a backlog of pending payments.
These low allocations need to be considered in light of the fact that construction targets are high. The government is to construct, according to the finance minister’s speech, 18.8 million toilets and 5.1 million new rural houses this year. In the absence of increased allocations, this seems no more than an empty promise. More importantly, the immediate concern of alleviating rural distress remains unaddressed.
And now to this budget’s showstopper—the National Health Protection Scheme to cover 100 million poor and vulnerable families with a coverage of up to Rs5 lakh per family. This, according to the finance minister, will be the world’s largest government-funded healthcare programme. The focus on healthcare in this budget is indeed very welcome. For the last three years, the government’s health policy has been floundering and in need of urgent attention. But I fear that this new approach runs the risk of creating the world’s largest, unregulated public-private-partnership with limited impact on health outcomes.
Health insurance schemes are not new to India. The government of India has been running the Rashtriya Swasthya Bima Yojana (RSBY) since 2008 and many state governments have their own insurance programmes. Evaluations of these schemes have been few and far between but the limited available evidence seems to suggest that the effects on health outcomes are unclear and perhaps more crucially haven’t done much to reduce out-of-pocket expenditure. There is some evidence to suggest that this may have risen. An important reason for these limited gains is that the three key pre-conditions of a successful insurance programme have not been met. First, access and awareness. Despite a relatively long run, RSBY enrolments are low. According to latest government data, RSBY targeted an enrolment of 59 million families but only enrolled 36 million. Studies suggest that lack of awareness and poor targeting is an important reason for this. How the government is going to scale up from 36 million to 100 million is an open question. And given the low allocations, one could assume it doesn’t intend to, at least not this year.
Second, any attempt at improving tertiary healthcare will only be successful if its foundations, i.e. primary healthcare, are strong. This is necessary both to prevent minor illnesses from reaching hospitals and to ensure efficient referral for those who genuinely need hospital care. It is no secret that our primary health system is in a shambles and critical issues of doctor absenteeism and poor-quality care remain unaddressed. Given this, any major investment in tertiary care is unlikely to yield results.
Finally, the push for an insurance-based public-private partnership, such as what the government is currently proposing, is premised on the assumption that a state that has failed to get basic provision right can perform the far more complex task of regulation. To assume that a low-capability state like ours can perform a task as complex as regulating private healthcare—which includes addressing pricing and quality control, especially when existing legislation is weak—is a recipe for disaster. The first step to improving healthcare is reforms in primary care and getting doctors to work. Health insurance programmes that are not embedded in a health system reform effort are unlikely to achieve this.
So in the final analysis what can be said of this budget? A new and evolving political statement, but one that is unlikely to improve Indians’ “ease of living”. What this means for Election 2019, only time will tell.
Yamini Aiyar is president at Center for Policy Research.
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