India’s public health care system may have a problem. Earlier this week, the government slashed its $5 billion annual health care budget by a fifth, almost certainly straining a system that is creaking at the core and on which the country already spends an abysmally low amount.
India spends just 1.3 percent of its Gross Domestic Product (GDP) on public health care, and even including expenditure on private health care, the figure stands at 4.3 percent. Comparative data show that in terms of health care expenditure as a percentage of GDP, India significantly lags behind Brazil, Russia, China and South Africa, countries that are typically lumped together in the so-called BRICS bloc.
The Narendra Modi-led Bharatiya Janata Party (BJP) government faces fiscal constraints, necessitating the cut. The Modi government is facing a tax-revenue deficit of as much as one trillion rupees ($15.7 billion), forcing it to cut back on expenditure to meet its fiscal deficit target of 4.1 percent. However, this is not the first time that this has happened. In the previous fiscal year, the Congress party-led United Progressive Alliance (UPA) regime, under the premiership of Manmohan Singh, too had pruned the health budget by a similar amount.
But apart from the sagging economy, this cut in health expenditure could be an indicator of problems in financial management in the health ministry. Data from the Indian finance ministry’s mid-year analysis show that until September this year, the country’s health ministry had spent just about 42 percent, or less than half of the funds allocated to it in the annual budget. Proportionally, this is even less than the 48 percent it had spent in the same period last year when the Congress-led regime was in power.
The government’s own rules prohibit ministries from spending over 33 percent or one-third of their annual allocations in the last quarter of the financial year (January to March). This means that if a ministry wishes to exhaust its allocated funds, it has to spend at least two-thirds of its allocation between April and December of a financial year, failing which its spending would be restricted.
When the government does not spend enough, the citizen must. Typically, personal health care costs involve the cost of medical care (including hospitalization) and the cost of medicines. Government data from 2011 to 2012 show that while 80 percent of the non-hospitalization medical expenditure was on medicines in urban areas, the figure for rural India was 75 percent.
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