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India will be nowhere near spending the promised 2.5% of GDP on health at the current rate at which budget allocation for health is increasing. The allocation is short by over Rs 55,000 crore going by government’s own projection of what should have been allocated in 2020.
A National Health Mission presentation from 2018, provided a road map for reaching the targeted 2.5% by 2024-25. It calculated that the combined allocation of the centre and states should reach 1.58% of GDP by 2020-21 and 35% of this would have to come from the centre.
By that calculation, the central outlay for 2020-21 ought to have been Rs 1.24 lakh crore. Instead, it is only Rs 69,234 crore or about 56% of what was needed to stay on course.
The health outlay increased by a measly 4.2%, when it needed to go up by 80% to reach the government’s target of Rs 1.24 lakh crore. Similarly, in 2019-20, the calculations show that central allocation for health should have been over Rs 1 lakh crore and that of states Rs 1.86 lakh crore for total public health expenditure to touch 1.4% of GDP.
However, the central allocation of about Rs 66,500 crore fell short by almost Rs 34,000 crore, while the states allocated well over their target (see graphic). Thus, central allocation increased by just 18% in the 2019-20 budget when it had to go up by about 78% to reach the target.
According to RBI’s study of state budgets, in 2019-20, all states put together allocated Rs 1.97 lakh crore for health, accounting for 75% of the total public expenditure on health. By the government’s projections in the roadmap, states needed to allocate only Rs 1.86 lakh crore.
The pattern was the same in 2018-19 too. States allocated well above their target and accounted for 76% of public health expenditure, while the centre fell short of target and accounted for barely 24% instead of the expected 35%. The roadmap calculated future allocations based on an estimated GDP growth of 7.5% and inflation rate of 4%.
Based on these estimates, the allocation would have to be over Rs 1.5 lakh crore in 2021 22 (next budget) to touch 1.76% of GDP, a more than 100% increase from the current allocation of Rs 69,000 crore, which seems unlikely. Thus the steady increase over the next three years from 1.76% to 1.98% and then 2.22% before reaching 2.5% of GDP by 2024-2025 seems to be averitable pipe dream.
With economic slowdown, there are apprehensions that allocations for sectors like health could fall even further short in the coming years as the government struggles to meet expenditures it cannot cut back on like salaries and pensions. In such a scenario, even maintaining the current level of health spending as a percentage of GDP could prove to be a challenge.
The Comptroller and Auditor General’s report tabled in Parliament last year had also noted that the allocation in 2019-20 was way short of the target of Rs 1 lakh crore allocation for health sector by 2019-20.

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