Budget 2013-14: provisioning for universal healthcare or moving away from agenda?

The world trend is to move towards public health systems, but developments in India seem to be in the opposite direction

By Sona Mitra
Published: Wednesday 20 February 2013

The government of India is yet to recognise and institutionalise the right to health as a universal right of every citizen. India’s public spending on health, at about one per cent of the country’s GDP, has been among the lowest in the world. On the other hand, with a high burden of out-of-pocket spending on health, millions of people are reportedly being pushed below the poverty line every year. As a result, provisioning for healthcare has emerged as the most critical public policy challenge confronting India at the present juncture.  In this context, the present article focuses on the 12th Five Year Plan’s proposals for the health sector for the next five years, which are expected to influence the allocations for health in the forthcoming Union Budget 2013-14.

The 12th Five Year Plan document promises a lot of deliverables in the health sector over the next five years. It envisages a National Health Mission, moving the National Rural Health Mission (NRHM) into the urban sphere, and launching of an all-inclusive health mission that would work towards achieving universal healthcare in the country. In a welcome initiative, the plan document proposes to increase India’s overall public spending on health (combined spending on health by the Centre and all states) to 2.5 per cent of GDP (including budgetary allocations made towards Water and Sanitation, Integrated Child Development Services and Mid-Day Meal scheme) by the end of the 12th Plan period. The 12th Plan proposes an allocation of Rs 2,68,551 crore for the next five years, which is a significant increase from the total Plan expenditure on health over the 11th Plan period. It rightly recognises the need to reduce out-of-pocket expenditure of households on health and step up the share of public spending on health to almost 70 per cent of total health spending (government spending and out-of-pocket spending) from a current share of roughly 30 per cent.

The Plan document also highlights the importance of enhancing availability of drugs within the public healthcare sector, for which the Plan proposes to set up 3,000 more Jan Aushadhi Stores  in rural areas across the country, during the five-year period, where medicines would be provided free of cost. With regard to this specific proposal, there exists a growing expectation from the Union Budget 2013-14 that it would make a separate allocation of up to Rs 30,000 crore for financing the provisioning of 348 major generic drugs free of cost within the country as a step towards universalising access to medicines in rural areas.

Enter PPP

However, the roadmap for financing of the proposed allocations for health over the next five years is where the dichotomy of the Plan surfaces. While suggesting certain initiatives like introducing “sin tax” on harmful items like alcohol and tobacco for financing the health sector, the Plan proposes general tax revenues as the principal source of finance for public health, to be supplemented by partnerships with the private sector and contribution of corporate sector as part of corporate social responsibility. The Plan proposes to increase public expenditure on health by 34 per cent annually for the next five years and also proposes to keep the share of Centre-state expenditure at the existing 30:70 ratio.

We may note here that in 2004-05, the United Progressive Alliance government at the Centre had acknowledged in its charter of governance, the National Common Minimum Programme (NCMP), that it needed to increase the country’s total public spending on health to the level of 2-3 per cent of GDP by the end of its tenure—financial  year 2008-09. Now, a similar target (or rather, a more diluted version) has been set for stepping up the country’s public spending on health for financial year 2016-17. This only implies that the government is not very keen to acknowledge the implications of the acute shortage of financial resources for health sector, which have persisted over the last decade.

As regards the proposed division of financing responsibility between the Centre and the states, given the growing dominance of the Centre in the domain of public resource mobilisation in the country (in collection of tax revenue), the inability of several backward states to step up their own mobilisation of revenue, and the shrinking share of untied transfers to states within the total transfers from the Centre, it was necessary for the Planning Commission to ask the Centre to shoulder a bigger share of the financing responsibility in the next Plan period instead of continuing with the same 30  per cent share in overall public spending on health. In fact, unless the 14th Finance Commission suggests some radical changes in the domain of Centre-state sharing of resources (which seem unlikely from the terms of reference given to this Finance Commission), the 12th Plan period might not witness significant increase in states’ spending on health, which in turn would imply that the country’s overall public spending on health would continue to be much lower than the required levels.

Instead of ensuring adequacy of financial resources for provisioning essential health care to all, there seems to be a wishful thinking on part of the Planning Commission to expect large contribution from the private sector for creating universal access to health care. This, in fact, comes across as the growing unwillingness of the government to provide for a healthy existence for the poor and vulnerable sections of the population. It also reflects the willingness of the Planning Commission to usher in private operators as partners within the public sector health care system.

No roadmap for achieving development goals 

This is where the dichotomy of the Plan document gets reflected. While the Planning Commission on the one hand recognises the increased burden on the households due to an increase in the share of private service providers within the health sector and highlights the demerits of such services, it moves ahead with a roadmap of providing the private operators with a public infrastructure without any robust system of regulations and monitoring mechanisms. Experts have correctly pointed out that with such an approach the government ends up subsidising the private sector instead of the people.

Taking into account the international experience, in countries with universal access to health care like those in Europe or Latin America, the systems have been achieved through government. In Asia, universal healthcare in Sri Lanka and Thailand has also been achieved by active participation of the government.  While the world trend is to move towards public health systems, the developments in India seem to be in the opposite direction.

Despite accepting or acknowledging that the country faces an acute shortage of skilled human resources (to the extent of at least 6.4 million skilled people), the country is still far from fulfilling the Millennium Development Goals (MDGs) in health (in terms of reducing infant and maternal mortality rates and improving child sex ratio, TFR and malnutrition among children). Studies have shown increased poverty levels among rural population due to high expenditure on health, and an acute need to increase per capita public spending on health. But the Plan document fails to provide a solid roadmap for generating adequate financial resources and depends on the private sector for additional resources. The approach of the plan document, if analysed closely, therefore, raises doubts on whether we are moving towards universalisation of healthcare or moving away from it.

The author works with Centre for Budget and Governance Accountability (CBGA) and can be reached at sona@cbgaindia.org


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