In television debates on one year of the Modi government, the ruling party and government spokespersons have brushed aside criticism of hefty cuts in social sector-spending by saying there won’t be any real shortage of funds for sectors like health because more money will now be available to states. They have argued that slashing of central government’s health budget should be viewed in the context of the new tax devolution formula that increases the share of state governments in central taxes from 32 per cent to 42 per cent. In effect, this means the future of public spending on health now hinges on the hope that states will prioritise health and allocate more funds for it.
While it is true that states have been major contributors to health spending with public health expenditure ratio between the Centre and states being 31:69, the Centre’s role has been more critical in terms of providing policy guidance, technical help and direct financial assistance for certain key schemes. The previous government had demonstrated with the National Rural Health Mission (now subsumed in National Health Mission or NHM) that greater central spending can spur states into action in key area. Some programmes like National AIDS Control Programme were fully supported by the Centre.
In the name of financial devolution, this pattern of funding has been suddenly changed. Besides cutting down budgetary support for NHM and AIDS control, as many as 15 centrally-funded schemes have not been allocated any separate funds for fiscal 2015-2016. Nine of these 15 schemes have been labelled by health ministry as “non-negotiable” for which money must be found somehow otherwise it would have catastrophic impact on equitable access to health. Take for instance trauma care for which the health ministry had sought Rs472 crore. This money was to be used for capacity building for developing trauma care facilities in government hospitals on national highways, considering the fact that road accidents are a major killer in India. The National Programme on Prevention and Management of Burn Injury – for which Rs171 crore had been sought – was aimed at developing burn wards in government hospitals. The National Tobacco Control Programme too has been given a thumbs down.
The national mental health policy, unveiled in September 2014, had promised universal mental health care and expansion of the district mental health programme but the National Mental Health Programme stands to get no support from the central government. The most critical central scheme facing uncertainty is the National Programme for Prevention and Control of Cancer, Diabetes, Cardiovascular Diseases and Stroke. Others in this list include programmes for the care of elderly, prevention of blindness, human resource development and telemedicine. The health ministry has been told that all these 15 schemes will now be part of NHM. When the budget for NHM itself has been squeezed, it is difficult to understand how NHM is going to accommodate more schemes. Moreover, NHM has a specific mandate of improving primary and secondary healthcare. If tertiary care schemes are merged into this, money may flow to these schemes at the cost of primary and secondary care components.
The second option is to depend on states to contribute more to these schemes but the quantum of states’ share remains uncertain. Some schemes like AIDS control will now be fully at the mercy of states. Underfunding of such critical schemes may wipe out gains made in the past. The rate of new HIV infections has been declining, but at the same time new infections are appearing in low-prevalence states. Nutrition and health related programmes of other ministries too have been hit. An example of this is massive 50 per cent cut in allocation for the Integrated Child Development Scheme (ICDS) run by the Ministry of Women and Child Development. This has serious implications for child nutrition.
The opinion among public finance experts is divided over the quantum of additional money that would become available as a result of devolution. Even presuming that sufficient funds would flow to states, it would depend on states to decide how much to spend on health, and set priorities within the health sector. Past experience about health spending by states shows that expenditure on health by states has been declining and the expenditure on health is much lower in states with poor health indicators. This means that states that ought to spend more on health are not doing so. Overall, states are spending more on urban and curative facilities than in rural areas where infrastructure needs to be strengthened. Most states lack capacity in health sector to absorb additional funds, as reflected in huge amounts of unspent central funds in health sector.
The parliamentary standing committee on health, which went into the health budget for 2015-2016, has nailed the issue. In its view “huge assumption has been made that 42 per cent transfer of central taxes to states in the form of untied funds would compensate for the shortfall in central funds for health”. If this assumption falls flat, then there would be severe shortfall of money for health sector in backward states which already fare poorly on various health indicators. “Past experience shows that if spending is left to states, contractor-intensive sectors take priority over non-contractor intensive sectors and health, not being a contractor intensive sector, will take a backseat in such circumstances,” the panel has warned. Given precarious state of states' finances, according to the panel, expecting states to allocate adequate financial resources for health for year 2015-16 is “unrealistic”. In any case, more funds from states for health schemes during 2015-16 is unlikely as most states have already presented their budgets.
At a time when India needs a clear roadmap to achieve the goal of universal health, the central government appears to be dithering from its commitment to public health. Both central and state governments together spend a mere 1.1 per cent of GDP on health. Moreover, public funding is just 20 per cent of what Indians spend on health every year. The rest 80 per cent is ‘out of pocket’ expenditure by people. The goal was to enhance public spending to 2.5 per cent of GDP by the end of the 12th plan, so as to reduce the burden on people’s pocket. With reduced public funding, universal access to health for Indians will remain a pipe dream.
The writer is fellow, Centre for Media Studies, New Delhi