India Health Budget: Did Lower Tax Receipts And Lack Of Spending Force India To Cut Back?

India’s public health care system may have a problem. Earlier this week, the government slashed its $5 billion annual health care budget by a fifth, almost certainly straining a system that is creaking at the core and on which the country already spends an abysmally low amount.

India spends just 1.3 percent of its Gross Domestic Product (GDP) on public health care, and even including expenditure on private health care, the figure stands at 4.3 percent. Comparative data show that in terms of health care expenditure as a percentage of GDP, India significantly lags behind Brazil, Russia, China and South Africa, countries that are typically lumped together in the so-called BRICS bloc.

The Narendra Modi-led Bharatiya Janata Party (BJP) government faces fiscal constraints, necessitating the cut. The Modi government is facing a tax-revenue deficit of as much as one trillion rupees ($15.7 billion), forcing it to cut back on expenditure to meet its fiscal deficit target of 4.1 percent. However, this is not the first time that this has happened. In the previous fiscal year, the Congress party-led United Progressive Alliance (UPA) regime, under the premiership of Manmohan Singh, too had pruned the health budget by a similar amount.

But apart from the sagging economy, this cut in health expenditure could be an indicator of problems in financial management in the health ministry. Data from the Indian finance ministry’s mid-year analysis show that until September this year, the country’s health ministry had spent just about 42 percent, or less than half of the funds allocated to it in the annual budget. Proportionally, this is even less than the 48 percent it had spent in the same period last year when the Congress-led regime was in power.

The government’s own rules prohibit ministries from spending over 33 percent or one-third of their annual allocations in the last quarter of the financial year (January to March). This means that if a ministry wishes to exhaust its allocated funds, it has to spend at least two-thirds of its allocation between April and December of a financial year, failing which its spending would be restricted.

When the government does not spend enough, the citizen must. Typically, personal health care costs involve the cost of medical care (including hospitalization) and the cost of medicines. Government data from 2011 to 2012 show that while 80 percent of the non-hospitalization medical expenditure was on medicines in urban areas, the figure for rural India was 75 percent.

The second most important aspect of health care expenditure is research and development. According to a Reuters report, the government has also cut spending on HIV/AIDS programs by a third. And, as this report in The Hindu newspaper points out, 2.1 million people in India were HIV-infected by the end of 2013. Further, as UNAIDS, the United Nations’ agency dealing with the disease, points out, more than half of all AIDS-related deaths in the Asia Pacific region are in India.

Some of the worst sufferers of a dysfunctional health care system are children. According to the CIA World Factbook, India is the 50th worst in terms of infant mortality rate, out of a total of 224 countries, with more than 43 deaths of children below the age of one, for every 1,000 live births.

Earlier this month, The New York Times reported that as many as 58,000 infants die in India every year due to bacterial infections. The report said that the rising toll of resistant infections could soon undo efforts to improve the infant mortality rate in the country. In January 2012, The Atlantic said in a report that over half of all bacterial infections in Indian hospitals are resistant to common antibiotics.

In fact, in August 2010, medical journal The Lancet Infectious Diseases had reported the emergence of the New Delhi Metallo-beta-lactamase-1 (NDM-1), a new enzyme that makes bacteria resistant to antibiotics in India, Pakistan and the U.K. In 2011, Timothy R Walsh, who co-authored the paper published by The Lancet that first spoke of NDM-1, had said that as many as 100 million Indians could be carrying the “superbug.” The Indian government, however, rejected the findings, stating that there was no evidence to suggest that it was a threat to public health.