New Delhi: The Union government‘s expenditure on healthcare may appear to be rising at first glance. However, it has actually been steadily shrinking in the last five years (2018-19 to 2023-24) whether as a share of the Budget or as a percentage of GDP. In fact, the spending has barely kept pace with inflation since 2019-20.
As a percentage of the total Budget, health spending has shrunk from 2.4 per cent in 2018-19 to 1.9 per cent in 2023-24. As a percentage of GDP, it has fallen from 0.30 per cent to 0.28 per cent in 2023-24.
As for inflation, the outlay in 2019-20 was a little over Rs 66,000 crore, while in 2023-2024 it was just under 83,500 cr. Adjust for inflation using the wholesale price index and that translates to a tiny rise from around Rs 65,000 crore to Rs 66,000 crore at 2018-19 prices. And this is not even taking into account the fact that inflation in the healthcare sphere is likely to be much higher than in general price levels.
What is even more worrying is that even this low spending is after adding funds collected through the health cess. When the cess was introduced in 2018, it was claimed that it would top up government spending on health to take care of the health of poor and rural families. Instead, the thousands of crores collected each year through cess has in effect been used to make up for the steady cut from normal budgetary resources that the health sector has been facing.
In 2022-23, the Centre’s health spending included over Rs 18,300 crore that came from the health cess. If you take the cess out, the Centre’s budgetary spending would be just Rs 59,840 crore, less than what was spent before Covid, in 2019-20 (Rs 66,042 crore) even without adjusting for inflation.
In 2018, when the cess was introduced, health spending was 2.4 per cent of government’s total expenditure. If the government spent the same proportion of its total spending in 2023-24, it should have spent over Rs 1.07 lakh crore on health. Instead, the revised expenditure for 2023-24 showed just over Rs 83,400 crore, which included Rs 18,300 crore from health cess.
Shockingly, even after adding what seems like a large one-time expenditure for Covid in 2020-21 (Rs 10,655 crore) and 2021-22 (Rs 15,955 crore) the health spending in these years does not equal what the expenditure would have been if the spending had been at the 2018-19 level of 2.4 per cent of the total budget expenditure.
Health sector spending includes allocation for health and family welfare, health research and Ayush. Ayush share saw significant increase as a share of government’s total expenditure. Spending on health research went up just marginally though 70-80 per cent of this is on the Indian Council for Medical Research, except in 2020-21 when 40 per cent of the allocation was for Covid emergency response. However, spending on health and family welfare, which is meant for national programmes, the national health mission and health system strengthening, has seen a substantial cut in terms of its share in GDP and in total budget expenditure.
Post 2014, the highest share that health and family welfare has had of the total budget spend was 2.4 per cent in 2017-18. After that, this share has steadily decreased, including in the Covid years, despite separate allocation for Covid response, to touch 1.7 per cent in 2023-24. If the health cess component is not counted, this would fall even further to 1.5 per cet.
