Hole in a pocket: Story of Indian health spend
India’s public health funding is small and still is not fully utilised. This hurts the nation’s poor
Public health expenditure (PHE) accounted for 1.03% of India’s gross domestic product (GDP) in 2002, according to the World Health Organization (WHO) global health expenditure database. The same year, the National Health Policy (NHP) declared the government’s intention to increase PHE to 2-3% of the gross domestic product (GDP).
Not much has changed since then. In 2014, WHO data showed that India’s PHE as a percentage of GDP stood at 1.41%. The government’s own National Health Profile 2017 pegs this at 0.98% in 2014, rising to 1.18% in 2017. India is ranked among the worst nations on this parameter, flanked by Madagascar at 1.47 and Turkmenistan at 1.35.
Typical points of reference, such as the BRICS nations, are each at well above 3%. Even a small South Asian nation like Sri Lanka spends 1.96% of GDP on public health.
While spending is small, even these funds are not utilized entirely. The centre and states are jointly responsible for this situation. Health is a state subject as per the Constitution. The centre is involved in policymaking and fund allocation, while states have more scope for implementing health services, and topping up the central allocation.
The centre’s role has increased over time with the launch of the National Health Mission in 2005 (initially known as the National Rural Health Mission). The centre’s share in public financing of the health sector increased steadily from 20.3% in 1990-91 to 28.3% in 2013-14. The ministry of health and family welfare did not spend 3.32% and 10.09% of funds allocated to it in fiscal years 2015-16 and 2016-17 respectively. Even this is an improvement over the three preceding years when unspent funds amounted to over 18%.
Incomplete utilization is explained by the government’s laborious planning cycle beginning in October the previous year. This results in ministries demanding grants based on preliminary information and estimates of future expenditure.
Utilization by states is much worse—a study by Mita Choudhury and Ranjan Mohanty from the National Institute of Public Finance and Policy (NIPFP) in 2017 revealed that only 55% of allocated funds were spent by the states.
Two states—Uttar Pradesh and Bihar, where a quarter of Indian citizens reside—used only 44% and 45% respectively of allocated funds.
Non-utilization of funds by states has been attributed to delayed release of funds by states from treasuries to state health societies.
This has far-reaching effects. With wholly inadequate public spending, over 62% of health expenditure is borne by Indians out of their pockets. This is the tenth highest in the world, placing India in the company of conflict-ridden nations such as Tajikistan and Afghanistan.
What does this mean for a poor labourer somewhere in eastern Uttar Pradesh, whose family of, say, four may lie just above the poverty line, surviving on an annual income of Rs30,000. The average Indian’s annual out-of-pocket spend on health is about Rs2,394—which means the average family of four spends Rs9,576. That’s 31.92% of family income and the labourer struggles to provide for it.
Further, a single catastrophic health event requiring extended hospitalization could push such a family below the poverty line —for generations if the labourer has to go to a money-lender. He would not be alone—catastrophic health expenses push 63 million Indian families below the poverty line every year. I have come across many poor families who choose to forego treatment because of prohibitive costs. Do India’s abject health outcomes surprise you?
India’s health outcomes and spending have failed to keep up with its popular economic growth narrative. As Amartya Sen said, “There isn’t a single place where growth has taken off without an educated and healthy workforce”.
The NHP 2017 declared its intention to raise public health expenditure as a percentage of GDP to 2.5% by 2025. Increased spending has been a chimera for the last three decades.
Let’s hope that poor families are not forced to compromise on health.
Ashok Alexander is founder-director of Antara Foundation. His Twitter handle is @alexander_ashok