The Union health ministry has been allocated Rs 90,958.63 crore in the 2024-2025 budget, an increase of 12.96 per cent over the Rs 80,517.62 crore 2023-24 revised estimates. The health sector was originally allocated Rs. 89,155 crores (excluding the Transfers to States by the Ministry of Finance) in the 2023-24 union budget which was subsequently revised to Rs. 80,517.62 Crore. Therefore, we have to wait for the revised estimates for the year 2024-25 (which will be announced in due course for the FY 2024-25) before we can make any meaningful interpretation on the quantum of increase in the budgetary allocation.
Out of the Rs 90,958.63 crore, Rs 87,656.90 crore has been allocated to the Department of Health and Family Welfare and Rs 3,301.73 crore to the Department of Health Research.
The government has also announced Customs duty exemptions on three cancer treatment drugs — Trastuzumab Deruxtecan, Osimertinib and Durvalumab. The Government has also proposed changes in the BCD (Basic Customs Duty) on X-Ray tubes and flat panel detectors for use in medical X-Ray machines under the Phased Manufacturing Program, which should be beneficial to the diagnostic centres.
Among the centrally sponsored schemes, the budget allocation for the National Health Mission has been increased from Rs 31,550.87 crore in 2023-24 to Rs 36,000 crore in 2024-25 and for the Pradhan Mantri Jan Arogya Yojna (PM-JAY) from Rs 6,800 crore to Rs 7,300 crore.
The budget allocation for autonomous bodies has been increased from Rs 17,250.90 crore in 2023-2024 to Rs 18,013.62 crore in 2024-25. The budget allocation for the AYUSH Ministry has been increased from Rs 3,000 crore to Rs 3,712.49 crore. For the National Tele Mental Health Programme, the budget allocation has been increased from Rs 65 crore to Rs 90 crore. The allocation for the National Digital Health Mission remains the same at Rs 200 crore.
The budget does not mention bringing senior citizens aged 70 and above under the fold of the Ayushman Bharat-Pradhan Mantri Jan Aarogya Yojana (AB-PMJAY) as promised in the Bharatiya Janata Party’s (BJP) election manifesto earlier this year.
Policy statements vs Reality
The National Health Policy (NHP) 2017 aims to have budgetary allocation to health sector by Union and State governments at 2.5% of the GDP by 2024-25. With the GDP estimate of Rs.327 Lakh Cr, the budgetary allocation to health sector by both the Union and States at 2.5% of GDP should be Rs.8.19 lakh Cr and the Union Government’s contribution at 40% should have been Rs.3.28 Lakh Cr. Whereas, the healthcare budget in 2024-25 by the Union Government is at Rs.94,671 Cr which is hardly 29.5% of what is estimated in NHP 2017.
The share of Union health budget as a proportion of GDP is 0.29% in 2024-25. This includes grants to the states, which are ultimately accounted for in state health budgets. Union health budget as a percentage of GDP is also declining over a period (0.56% in 2021-22, 0.42% in 2022-23 and 0.35% in 2023-24). Economic Survey 2023-24 says the central and state governments combined budgeted expenditure on the health sector was 2.1% of the GDP in 2022-23 whereas the revised estimate for the year 2021-22 was 2.2% of the GDP and it was 1.6% 2020-21 (actual figures).
There is a significant reduction in the share of health in the aggregate Union budget, which was 3.6% in 2021-22, fell to 2.7% in 2022-23 and further went down to 2.4% in 2023-24 and declined to 1.96% in 2024-25. Shift towards privatization and health insurance could be one of the reasons for the declining trend in the government’s budget allocation to healthcare sector.
Recently, AB-PMJAY achieved a milestone of generating 34.2 crore Ayushman cards across Bharat, with 49.3 per cent held by females (as of July 8, 2024). Moreover, the scheme has covered 7.37 crore hospital admissions so far. As per the Economic Survey 2023-24, “In the medium term, health premiums are projected to grow by 9.7 per cent annually in 2024-28, with regulatory initiatives to improve the attractiveness of insurance offering some support.”
While digital health initiatives have the potential for the country to address the gaps in physical infrastructure in health, and schemes like AB-PMJAY can bring more poor people under the umbrella of health insurance, we have a long way to go with regard to preventive healthcare and health for all.
Overall, it can be said that though there has been an increase in the amount of budgetary allocation, public health spending as a percentage of the GDP and the share of health in the aggregate Union budget have been declining over the years. It is also evident that raising the public health spending to 2.5% of GDP by 2025 appears to be a distant dream rather than a near reality.
Need for a strategic approach
Therefore, the Government should adopt a strategic approach to address the major challenges in Bharatiya Healthcare. Bringing more drugs and medicines under price control by NPPA (National Pharma Pricing Authority), exercising price control over medical devices, enforcing pricing regulations on all medical procedures and treatments offered by hospitals and expanding the outreach of AB-PMJAY to provide universal healthcare could be some of the major policy measures the Government must think of. Certain initiatives that are visible in this direction are as follows:
In February 2024 a parliamentary standing committee on Chemicals and Fertilizers had recommended that the devices which are required for critical care to the patients should be listed under National List of Essential Medicines (NLEM).
The Supreme Court while responding to a PIL directed the Union Government to find a way to fix the price bands for all medical procedures and treatments offered by hospitals in the country and even hinted to impose the medical rates charged under the Central Government Health Scheme (CGHS) on all hospitals as an interim measure. (27, February, 2024). It must be possible for the Government to fix a differential pricing mechanism by classifying the hospitals into various categories like- general hospitals, nursing homes, specialty hospitals, corporate hospitals etc.
Let us hope that the above initiatives will be taken forward to their logical end in the near future.
Dr. B.N.V. Parthasarathi
Ex Senior Banker, Management and Financial Consultant, Visiting Faculty at Premier B Schools and Universities. E mail- bnvpsarathi@yahoo.co.in
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