Almost all hospitals funded by the Centre – including the AIIMS, Delhi, JIPMER, Pondicherry and PGI, Chandigarh— had their outlays slashed in the 2020-21 Budget or were given an increase that is not even enough to cover inflation. Since none of these hospitals, which treat lakhs of patients free each year, can cut corners on fixed costs like salaries of employees, public health activists fear that they will have to either cut down services or start charging patients, either way impacting the poorest patients.
Most of these centrally funded hospitals have shown more than 100% utilization of funds originally allocated for the current year, as is evident from a comparison of the budget estimates for 2019-20 and the revised estimates, a reassessment of what will actually be spent by the end of the year. Yet, most of them have faced budget cuts when this year’s allocation is compared to the revised estimates.
Kalawati Saran Children’s hospital in Delhi is the only case where the increase of almost 6% just about covers inflation if we assume that to be of about 5%. For all other hospitals, there’s either a decrease or an increase of under 0.5%, which clearly doesn’t cover inflation, meaning in real terms their budgets have been cut.
Public health experts expressed the apprehension that the hospitals might be forced to generate their own revenue by charging patients, and in the case of hospitals which are also training MBBS and post-graduate doctors, they might be forced to increase students’ fees.
While some argue that the hospitals will be able to make up for the budget cuts by getting reimbursement for treatment done under Ayushman Bharat, an analysis of Ayushman allocations and spending patterns from the current year suggests this is a tall ask. The scheme was allocated Rs 6,400 crore in the budget for 2019-20 and an identical amount in the latest Budget. According to the reported reply given by the government to an RTI query, only Rs 2,130 crore or 33.3% of its allocation was spent till November 21 last year. The National Health Authority, which administers Ayushman also revealed that 66% of patients who availed funds under the scheme used private hospitals.
Hence, assuming all of the Rs 6,400 crore allocated in this Budget is spent under the scheme, if roughly a third comes to government hospitals, that amounts to just over Rs 2,000 crore.
This amount would be spread over 10,000 government hospitals across India empanelled under the Ayushman scheme.
While it is true that the bigger hospitals would get more patients and hence a larger share of the expenditure under Ayushman, it is still extremely unlikely that the 12 central government institutions that have collectively faced a budget cut of Rs 555 crore will be able to make up for this through Ayushman reimbursements.
With government tertiary care hospitals facing such budget cuts, thousands of patients thronging these hospitals, the experts apprehend, might be forced from the public system into a predatory for-profit private tertiary care system which faces little or no regulation.

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