After every Union budget, discussions on public health focus on the one statistic that refuses to change: that government spending on healthcare continues to abysmally low at around 1.2% of the gross domestic product and much lower than most other developing countries. Insufficient public spending on healthcare comes at a serious cost. Two-thirds of the total health expenditure is paid out of the patient’s pocket and according to estimates, over 63 million people are pushed below the poverty threshold every year due to treatment costs alone.

The urgency of improving the quality of healthcare in India should gain visibility with the introduction of the new National Health Policy (NHP) in 2017. Recognizing the high degree of inequity in health outcomes and access to healthcare in India, NHP envisages widening the net of basic healthcare services by providing a comprehensive health package including palliative care and rehabilitation care services.

This will require greater investments in health. Yet, arguments on increasing health financing are often met with the reality of low absorption capacity. The recent Comptroller and Auditor General of India report on the performance of the National Health Mission (NHM) on reproductive and child health found that unspent balances available with states, including interest accumulated, ranged between Rs7,375 crore in 2011-12 to Rs9,509 crore in 2015-16. 

What explains this dichotomy? Over the past year, Accountability Initiative at the Centre for Policy Research has been trying to unpack the reasons for underutilization of funds impairing the quality of care. Our research points to the pressing need to focus on health systems strengthening, and more specifically on reforming two critical arms: human resources (HR), and the planning and budgeting systems. Let me explain.

HR forms the largest input in the health sector, frequently accounting for 60-80% of public health costs. Yet, as the recently released Rural Health Statistics show, despite significant increases in healthcare infrastructure under NHM, India continues to struggle with massive shortfalls and vacancies in health facilities. The failure to fill vacancies results in much of the HR budget remaining unspent, and given the nature of the programme, shortfall in critical posts also impair delivery of key services. 

Centralization of the planning and budgeting process adds cumbersome paperwork to an already overburdened staff. While NHM spoke about decentralized planning and the need to “move away from a budget-oriented plan to an outcome oriented one", in reality, planning has been relegated to a prescriptive process with the centre dictating guidelines and priorities. Consequently, templates are provided to capture line item-wise budgets and expenditure decisions require numerous sanctions. Over time, the conflation of accounting and accountability has percolated downwards, with states demanding that districts and blocks complete reams of paperwork for approval, before a rupee can be spent. 

In such a scenario, the short-staffed delivery systems find it easiest to only focus on routine activities such as incentives to front-line workers, staff salaries, and compensation benefits for institutional deliveries and sterilizations. Often, even maintaining status quo is onerous enough to be hailed as a great success if achieved, and understandably, expenditure on, and implementation of, softer items such as innovation and training, etc. are neglected.

The situation is exacerbated by the weakness of health management information systems. Currently, health data is fragmented across multiple sources, and sample surveys are often not reconciled. Administrative capacity limitations hamper data quality, further inhibiting effective planning and implementation. 

The government does recognize these constraints. A deep dive into the NHM budget for 2017-18 shows that while overall NHM allocations increased by 20%, those for health system strengthening within NHM saw a 52% increase, and funds for HR, a whopping 168%. Unfortunately, increasing HR in health facilities is not as straightforward. As the 2015 Parliament standing committee noted, even if India were to add 100 medical colleges per year for five years, it would still take till 2029 to achieve the World Health Organization prescribed norm of one doctor per 1,000 people. In such a scenario, ensuring that the existing staff is supported and employed efficiently becomes all the more crucial. One element of this is timely, relevant trainings to build a skilled workforce. But even more important might be HR rationalization and, if needed, a redistribution of roles and responsibilities within the administrative machinery in the interest of optimizing scarce resources. 

Correlatively, the planning and budgeting processes must be fortified through a reiteration of decentralized planning and a renunciation of line-item wise budgeting. This, along with a comprehensive information system, can go a long way in ensuring transparency in decision-making, and financial and performance accountability. Without addressing these fundamentals, we will end up treating only the patient not the disease! 

Avani Kapur is a fellow at the Centre for Policy Research and director of Accountability Initiative.

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