Union Budget 2023: What it means in facts and figures and why Govt still needs to increase allocation to health sector

The allocation for the health sector has effectively been reduced by around six per cent, in comparison to last year. Increased government spending is the only assured way to make health services affordable, says public health policy expert Dr Chandrakant Lahariya

Finance minister Nirmala Sitharaman ahead of presenting the budget to meet President Draupadi Murmu in New Delhi (Express photo by Gajendra Yadav)

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Every sector awaits the Union Budget with a lot of expectations. However, considering this was the first Union Budget after the COVID-19 had become endemic in the country, the expectations of the health sector were higher. Though the Finance Minister’s budget speech had six mentions of the word “health,” five of those were in context of other non-health sector considerations. The only time a direct reference was made to health, it was clubbed with education and skilling. In this backdrop, it would not be unfair to conclude that health has lost the priority of the Finance Ministry.

Among the highlights for the health sector is an announcement to launch a new mission to eliminate Sickle Cell Anaemia disease by 2047. Other key proposals include opening of 157 new nursing colleges and starting dedicated multidisciplinary courses for the medical devices. There is more attention on health research with proposals to open up the facilities in select ICMR labs for research by public and private medical college faculty; a call to the private sector R&D teams for collaborative research and innovation with the government; another call to promote the research and innovation in pharmaceuticals through setting up the centres of excellence and a call to industry to invest in research and development in specific and identified priority areas. However, even in this area, the government shied away from loosening the purse strings.

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The initiatives of other sectors, which are likely to contribute to better health, include the proposal to start three centres of excellence in Artificial Intelligence and launch of Aspirational Blocks Programme, covering 500 blocks for saturation of essential government services, both of which have health sub-components. A major taxation related announcement has been an increase of the National Calamity Contingency duty by 16 per cent on cigarettes and pan masala, which will make these tobacco products expensive.

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However, when it comes to financial allocation, the Ministry of Health and Family Welfare, including the department of health research, has received a nominal increase of around 3.5 per cent from Rs 86,175 crore in BE 2022-23 to Rs 89,155 crore in BE 2023-24. If this increase is adjusted for GDP growth, inflation and population growth, in the same period, the allocation for the health sector has effectively been reduced by around six per cent, in comparison to last year.

There are a few programmes which have been hard hit. For example, the allocation for the Pradhan Mantri Swasthya Suraksha Yojana, which funds the setting up of new AIIMS-like institutions, has been reduced significantly from Rs 9,410 crore to Rs 3,365 crore. Allocation for even the flagship Pradhan Mantri Ayushman Bharat Health Infrastructure Mission (PM-ABHIM), the programme which was launched to strengthen infrastructure and public health laboratories services up to block level in India, has been reduced by around five per cent. The allocation for the National Health Mission has remained nearly unchanged at around Rs 29,000 crore. The allocation for another flagship scheme, Ayushman Bharat – Pradhan Mantri Jan Aarogya Yojana – increased by 13 per cent to reach around Rs 7,200 crore. One of the worrying parts for the health sector is downward revision in allocation from BE 2022-23 to revised estimate (RE) 2022-23.

In FY 2022-23, though BE for the department of health and family welfare was Rs 86,200 crore, it was reduced to Rs 79,145 crore in RE, which was lower than the actual spending in FY 2021-22 at Rs 84,470 crore. Even the flagship PM-ABHIM, which had an overall allocation of around Rs 5,150 crore in BE 2022-23, had witnessed a steep cut in allocation by around Rs 3,000 crore in RE.

The downward revision of BE has implications on interpreting the findings of the Economic Survey 2022-23 — released a day before the Union Budget — and painted a relatively rosy picture of government spending on health. The Economic Survey 2022-23 has estimated that the budgetary allocation for the health sector was 2.2 per cent of GDP in 2022-23, which was higher than 1.6 per cent of GDP in 2020-21. Alongside, it also estimated that the share of health social sector spending went up from 21 per cent to 26 per cent. The Economic Survey has used the higher allocation in BE 2022-23 to arrive at this conclusion. However, the revised estimates for the same FY are already lower and actual spending would be even lower. More importantly, a lot of allocations were related to pandemic response such as COVID-19 vaccines and some other spending, which were one-time expenditure and not part of the health ministry budget. Many of these, i.e., funds for COVID-19 vaccine, are unlikely to be continued in FY 2023-24 and other years to follow. Therefore, such interpretation could be detrimental to the financial health of India’s health sector as it may prevent further and much-needed allocation for health.

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ALSO READ | Union Budget 2023: What are the key takeaways for the health sector?

When the government spending on health increased by 0.3 per cent of GDP — from 1.3 per cent to 1.6 per cent of GDP — the out of pocket expenditure was reduced by 16 per cent (from the 64 per cent to 48 per cent). This is another proof that increased government spending on health is the only assured way to make health services affordable and prevent people from falling into poverty. Therefore, as India aims to be a healthy nation by 2047, the only way to go is increase government investment and allocation for health.

(Dr Lahariya is senior consultant physician and public policy and health systems specialist, based out of New Delhi).

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