During its tenure, the Modi government has been accused of trying to save on social and subsidy expenditure, which goes towards improving critical social indices and instead channelling most of it into an infrastructure ‘stimulus’. In other words, policymakers at the Centre were accused of committing the cardinal sin of public policy: i.e. putting the cart before the horse.
In fact, certain news reports claimed that the Centre had ordered a cut of nearly 20 percent in its 2014/15 healthcare budget owing to fiscal constraints. However, such reports were soon found to be misleading. Nonetheless, a perception was created within certain segments of the media, that the current ruling dispensation did no care much for public health and education expenditure, and instead was a government for the corporate sector. Suffice to the say the Modi government has shot back at its critics. News reports on Wednesday claimed that the Centre plans to increase public investment in health from 1.04 percent of GDP to 2.5 percent by 2020. Approximately, 70 percent of this sum will be dedicated to expenditure in primary health care. Under its draft National Health Policy, the NDA government has decided to spur investment in public health care facilities across the country.
The expenditure per capita on health currently stands at less than Rs 1,000, whereas the government plans to raise it to Rs 3,800 at current prices. It is fair to suggest that the current ruling dispensation has finally showed some positive intent in the long-neglected public health sector. Public healthcare expenditure in India only amounts to 1.04 percent of India’s Gross Domestic Product, when compared to China (3 percent) and Brazil (4.9 percent). It is well below the 5 percent figure recommended by the World Health Organization. Although the prime minister has inaugurated a host of insurance schemes for the rural poor, it cannot make up for the terrible lack of public health infrastructure that currently exists in India. There is no better form of insurance for the rural poor than a functioning public health care system. The Centre has finally acknowledged this rationale.
Although an increase to 2.5 percent of GDP may not be enough to improve India’s moribund public healthcare system, it is definitely a step in the right direction. Funds for the above increase in healthcare expenditure are being sought through a health cess. Such a cess fund, the government has argued, could be sought from the imposition of additional duties on tobacco, alcohol, fatty, salty and sugary products that are considered unhealthy by doctors.
In fact, States will be incentivized by the Centre in the form of possibly more funds to ensure that at least 8 percent of their annual budgets are dedicated to providing health services. With a greater devolution of Central revenue, the onus of last-mile delivery in public healthcare services will be on the States. Moreover, essential and generic drugs and diagnostics will be provided free of cost for all primary health care needs in the country, according to the latest draft of the National Health Policy.
The only area, where greater clarity is required is the government’s claim that it would bring in private players to reduce the burden of overall expenditure. When it comes to the Indian private sector’s role in matters of public concern, its track record isn’t very good. One has to only look at the lack of initiative it has taken in Prime Minister Modi’s Clean India campaign.