Union Budget of Healthcare 2021: Interlinking All Aspects of Health

 

By Apurva Bhatnagar, Research Assistant, RIS

The Hon. Finance Minister on 1^st February, 2021 announced a 137 per cent increase in the budgeted expenditure on healthcare in India. The budget healthcare expenditure has increased to 2.33 lakh crore for FY 2021-22 from 94.45 thousand crore in FY 2020-21. With the National Health Policy, 2017 (NHP) envisaging annual expenditure on health and wellbeing at around 2.5 per cent of GDP by 2025, this is surely a welcome step towards that direction.

It should be noted that healthcare is currently in the state list, although there has been growing pressure from public healthcare experts in India that the subject should be moved to concurrent list. Expenditure of all state governments on Health and Family welfare has increased modestly from 0.6 per cent of GDP to 1 per cent of GDP during 2010-11 to 2020-21.[1] As noted by various public health experts/organizations, including RIS, this figure is still low, particularly when compared with international standards. Consider for example that the governments of Brazil, Russia, China and South Africa spend around 3.96, 3.16, 3.02 and 4.46 percent of their respective GDP on healthcare.[2] In fact, NHP 2017 also raises concern on the low government healthcare expenditure in India.

The result of low government expenditure on healthcare usually translates into high Out of Pockets Expenditure (OOPE) on healthcare which in turn increases the risks of vulnerable groups falling into poverty due to catastrophic health expenditures. In fact, one of the main targets of SDG-3, “Good Health and Wellbeing for All”, is to universally provide financial risk protection from catastrophic healthcare spending. It should also be noted that Hon. Finance Minister, Ms. Nirmala Sitharaman had highlighted that high OOPE in India is a matter of concern and government must pitch to address this, before revealing the hike of 137 per cent in healthcare. In Table-1 we reproduce the Annexure on expenditure on health and wellbeing from the budget speech to analyse the various heads under which the budgeted Rs. 2.33 lakh crores will be spend. We also see how these figures compare to the previous year’s budgeted and revised estimates in these same head.

Table-1: Breakup of Health and Welfare budgeted expenditure, 2021-22 (in Rs. crores)

Ministry/Department	Actuals 2019-20	BE 2020-21	BE 2021-22
D/o Health and Family Welfare	62,397	65,012	71,269
D/o Health Research	1,934	2,100	2,663
M/o AYUSH	1,784	2,122	2,970
COVID-19 related special provision
Vaccination			35,000
D/o Drinking Water and Sanitation	18,264	21,518	60,030
Nutrition	1,880	3,700	2,700
FC grants for Water and Sanitation			36,022
FC Grants for Health			13,192
Total	86,259	94,452	2,23,846

Source: Annexure, Part-A, Budget Speech 2021-22. Online at: https://www.indiabudget.gov.in/

A cursory look of the table-1 shows a clear intention of the government to focus more on precautionary and preventive healthcare practices. It is for this reason that the budget of Department of Clean Water and Sanitation has been increased by 179 per cent from Rs. 21,518 crore to Rs. 60,030. This is excluding the Finance Commission grant of 36,022 made for water and sanitation. There cannot be any doubt that this is a good step to prevent the spread of vector and water borne diseases, as well as other communicable diseases. It should be noted that the disease profile of India is undergoing a change where the disease burden is shifting from communicable diseases (CDs) to Non-Communicable Diseases (NCDs). Therefore, to reduce high OOPE in India, government must make the treatment of both CDs and NCDs, more accessible and affordable at Pan India level. The government flagship programme, Ayushman Bharat was introduced to tackle the issues of accessibility and affordability and this can be expanded further in coming years. Figures from table-1 also show that many of the heads under which the healthcare expenditure is distributed. This includes expenditure on COVID-19 vaccination and Finance Commission grants on health, water and sanitation. This increased allocation on healthcare in FY 2021-22 should be sustained in the coming years to achieve the healthcare spending target set forth by NHP, 2017.

Another interesting fact about the healthcare budget for this year that is not seen in table-1 would be the expenditure on development of pharmaceutical industry. The head for ‘Development of Pharmaceutical industry’ under the budget allocation of Dept. of Pharmaceuticals, Ministry of Chemicals and Fertilizers saw a massive jump of 196 per cent increased allocation compared to last years’ budget allocation.[3] The budgeted allocation for development of pharmaceutical industry in India was 42.05 crores last years, which has now been increased to 124.42 crores this year. It has been a firm stand of RIS, that government must incentivize Research and Development (R&D) initiatives in pharmaceutical industry and improve the university-industry connect in pharma sector. With a massive increase in budget allocation, the department of pharmaceutical would certainly have the means to work on the two issues ailing pharma industry in India. Although, how this figure will be utilized for the development of industry is yet to be seen.

In conclusion, this brief analysis of healthcare budget notes that we are on the right track towards achieving the goal of government healthcare spending as a proportion of GDP of 2.5 per cent. However, the intensified momentum and interest of government in healthcare, brought about by the pandemic, must be sustained.

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[1] Reserve Bank of India: State Finances : A Study Of Budgets, 2020. Online at: https://www.rbi.org.in/Scripts/AnnualPublications.aspx?head=State%20Finances%20:%20A%20Study%20of%20Budgets

[2] Global Health Observatory Dataset, World Health Organisation. Online at: https://apps.who.int/gho/data/node.main

[3] See: Union Budget, Ministry of Finance, “All Statements of Budget Estimates”. Online at: https://www.indiabudget.gov.in/