Unutilised funds result in sicker states

During Budget announcements, it may seem like the share of health budget has increased year on year, but this does not translate into reality. While the central allocations under the National Health Mission (NHM) may have increased year on year from Rs 17, 210 crores in 2011–12 to Rs 26,691 crores in 2017–18, there were significant differences in budgets proposed by states and those approved by the centre, say researchers.

Total approvals under NHM are based on Project Implementation Plans (PIPs) submitted by state governments. These approved allocations are called the Record of Proceedings (RoP). The final budget is calculated on the basis of central funds, proportional share of state releases and unspent balances available with the states.

Budget planning is conducted by analysing the money that is required from block level and above by states. For instance, a state may ask for Rs 100, of which Rs 80 is approved by the Centre. Of the approved amount, the centre and the state divide the expenditure.

Since FY 2014-15, funds are first released by GOI to the State Treasury. Money is subsequently routed to autonomous societies known as the State Health Societies (SHS). Till FY 2014-15, GOI provided 75 per cent of the funds and states provided 25 per cent. In October 2015, the fund sharing ratio was changed to 60:40.

According to a research paper by Centre for Policy Research, New Delhi, in 2016 – 17, on an average, only 74 per cent of total budgets proposed by states were approved. There are significant inter-state differences, the analysis states.

"Only 42 per cent of budgets proposed by Meghalaya and 62 per cent proposed by Jharkhand were approved, while 89 per cent budgets proposed by Madhya Pradesh and Mizoram were approved," said Avani Kapur, fellow, CPR.

Hundred per cent budgets as proposed by states are not approved because of under-utilisation of previous year's money. Expenditure of funds in 2015-16 was low. "Only 68 per cent of the total approved funds were spent,excluding the North East and Union Territories," the paper states.

While the estimated budgets as announced have been hiked, on analysing the fine print, it is seen that the approved budgets by the centre have plummeted. "In 2015-16, 90 per cent of budgets proposed under Reproductive and Child Health Flexipool were approved which decreased to 84 per cent in 2016-17. Similarly, while 85 per cent budgets proposed by states was approved under National Health Mission Flexipool in 2015-16, approval rates were less than 70 per cent in 2016-17," reads the analysis.

Also, delays in release of funds, had an impact on the expenditure. "In 2015-16, only 68 per cent of the total approved funds were spent. While Uttar Pradesh and Chhattisgarh spent only 58 per cent and 43 per cent of approved allocations in 2015-16. In the previous year, they had spent as high as 94 per cent and 85 per cent respectively," said Kapur.

This lead to huge unspent balances for all major states, that stood at Rs 9, 392 crore at the end of the year, of which Uttar Pradesh's balance alone comprised of Rs 3, 275 crore and West Bengal comprised of Rs 863 crore.

In a very bizarre contradiction, while 100 per cent budget proposed for Communicable Diseases was approved in Gujarat, Rajasthan and Uttarakhand, approval was as low as 26 per cent in Haryana. "It may so happen that if state does not have an adequate plan to utilise funds or has not spent last year's money, then approvals from centre will not come through," Kapur said.

It is a vicious cycle. Under-utilisation of funds leads to under-approvals. Also health infrastructure in India remains as abysmal as ever. As high as 43 per cent Primary Health Centres (PHCs) in Madhya Pradesh and 39 per cent of them in Chhattisgarh function without a doctor.

As of March 2016, no CHC in Sikkim had specialists. The shortfall was also high in Tripura (99 per cent), Arunachal Pradesh and Himachal Pradesh (98 per cent each). 93 per cent of CHCs in Bihar did not have specialists, while there was a 90 per cent shortfall in Chhattisgarh. The shortfall in Gujarat was 89 per cent while in Uttar Pradesh it was 84 per cent.