Govt Downsizes Ambitious Healthcare Plan Due to Funds Crunch

Friday, March 27, 2015
India spends just 1 percent of its GDP on public health (file photo)

Prime Minister Narendra Modi has reportedly scaled down his ambitious health care plan after its cost was estimated to be $18.5 billion over five years. Reuters has quoted several government sources who said that infrastructure spending to boost economic growth has left less funds available for the social sector in the short term.

The health ministry developed a draft policy last year on universal health care in coordination with the prime minister's office. The National Health Assurance Mission aims to provide free drugs, diagnostic services and insurance for serious ailments for the country’s 1.2 billion people.

The ministry proposed rolling out the system from April 2015, and in October projected its cost as $25.5 billion over four years. By the time the project was presented to Modi in January the costs had been pared to 1.16 trillion rupees ($18.5 billion) over five years.

According to Reuters, that figure was still too much for the government. The programme was not approved and the health ministry has been asked to revamp the policy, three health ministry officials told Reuters.

"The constraint on India's financial resources was conveyed to health officials, and even to those from other ministries," said one government official who attended the meeting where Modi was present.

The prime minister has had to make difficult choices in allocating government funds, delaying a promise he made in his election manifesto last year to accord "high priority" to the health sector. He had also promised a universal health assurance plan.

Modi has another four years left in his first term to fulfil the promise. India currently spends about 1 percent of its gross domestic product (GDP) on public health, but the poorly-managed public health system means funds are not fully utilised. According to Reuters, a health ministry vision document in December proposed to raise spending to 2.5 percent of GDP but did not specify a time period.

So health experts were dismayed when the Budget the government presented in February raised the allocation for the main health department only by about 2 percent from the previous year – which is less than inflation. The meagre increase dimmed prospects for the massive health plan, they said.

"How can it happen when you have truncated resources?" one health ministry official asked.

Currently only 17 percent of the population has some form of health insurance.


To Learn More:

Exclusive: Modi govt puts brakes on India's universal health plan (by Aditya Kalra, Reuters)

Putting the ‘universal’ in healthcare (by Lant Pritchett and Gulzar Natarajan, Indian Express)

Budget 2015: India needs a booster dose for health for all (by Kiran Mazumdar-Shaw)

India keeps tight rein on public health spending in 2015-16 budget (by Aditya Kalra, Reuters)


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