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Sinking Flagships and Health Budgets in India

The centre's attempt to increase spending on public health by hiking allocations to its National Rural Health Mission programme has failed because the states have responded by reducing their expenditure. Instead of decentralising expenditure on health, the centre has taken control of a larger share of resources for the sector, which have not been adequately utilised even for the priority programmes. The irony is that those who deliver care, understand the situation and can plan and budget have no role in decision-making while the decision-makers have no idea of the ground realities.


health expenditure accounts for less than

Sinking Flagships and Health

1% of the gross domestic product (GDP) in contrast to private health e xpenditure of

Budgets in India

over 5% of GDP. The latest budget is no different from the last five budgets or for that matter any earlier budget.

Ravi Duggal In the 2009-10 budget announced on

The centre’s attempt to increase spending on public health by hiking allocations to its National Rural Health Mission programme has failed because the states have responded by reducing their expenditure. Instead of decentralising expenditure on health, the centre has taken control of a larger share of resources for the sector, which have not been adequately utilised even for the priority programmes. The irony is that those who deliver care, understand the situation and can plan and budget have no role in decision-making while the decision-makers have no idea of the ground realities.

Ravi Duggal ( is an i ndependent health researcher and is a ssociated with the International Budget P artnership and the People’s Health M ovement.

ublic health budgets constitute a critical source for health equity in any society. If health indicators show gross inequities then it is evident that public investment in health is also grossly inadequate. The prime cause of underdevelopment of health and healthcare is inadequate allocations to health in government budgets. Data from across the world provides clear evidence that across the low and middle income countries over 5.6 billion people have to finance healthcare using the most inequitable method of out-of-pocket expenditure, often through borrowings and sale of assets, for over half their health expenditure (World Health Report 2008). This is so because in these countries public health budgets do not commit adequate resources. Where countries do take responsibility for at least over half of national health spending, even when they are low or middle income countries, then health outcomes and access to healthcare are generally favourable and equitable. For instance in Sri Lanka, Malaysia, Thailand, Cuba, Chile, and Costa Rica governments account for between 46% and 88% of total health spending and this leads to reasonably good health outcomes and relatively good access to at least basic healthcare (World Health Statistics 2007).

In India, with public health spending accounting for less than 20% of total health spending and out of pocket expenditure amounting to 98% of all p rivate health expenditure, health and healthcare access is not only poor but also highly inequitable. The National Family Health Survey (NFHS)-3 data brings this out very clearly. The extent of inequity between the top and bottom quintile for some key indicators is huge – U5 (under five years) mortality 2.97 times; access to doctor for ANC (antenatal care) 3.83 times; delivery in a health facility 6.59 times; full immunisation 2.9 times; no immunisation 10.11 times (NFHS-3). This is because the public

august 15, 2009

6 July 2009 public health considerations as usual got only a passing mention in the budget speech of the finance minister.1 He said that the government was committed to strengthening the delivery mechanism for primary healthcare, that the National Rural Health Mission (NRHM) allocation gets an extra Rs 20.57 billion over the interim budget’s (February 2009) Rs 120.70 billion allocation and that in the previous year the Rashtriya Swasthya Bima Yojana covered 4.5 million below poverty line (BPL) families by issuing biometric cards (no mention of how many actually are availing this insurance cover) and that the government plans to cover all BPL families under this health insurance programme for which Rs 3.50 billion has been allocated in the current budget. With over 56 million BPL families (as officially estimated)2 this works out to a mere Rs 62.5 per family or Rs 12.5 per capita!

Unkept Promise

Some of these statements may sound e ncouraging but the budget figures belie this. The overall increase in government expenditure over the previous fiscal is e stimated at 36% but the increase for the health sector is much lower at a mere 22%3 (Rs 226.41 billion in the current budget as against Rs 184.76 billion in 2008-09) so this in itself shows the low level of concern for the health sector in the budget of 2009-10. If we look at the flagship programmme in the health sector, the NRHM, then the situation is even more pathetic with the increase being only 15.6%, i e, Rs 144.42 billion in the current budget as compared to Rs 124.84 billion in the 2008-09 budget. The United Progressive Alliance government’s promise during its previous stint of taking public health spending to 3% of GDP is becoming even further distant as overall public health spending continues to stagnate below 1% of GDP.

The NRHM started four years ago with a commitment of making architectural corrections in the public health system and

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raising public health spending up to 3% of GDP. This article will attempt to analyse the public health budgets in the context of the NRHM to see where we have reached in terms of this commitment. It must be noted here that health and healthcare in I ndia are primarily state subjects and hence the union government constitutionally has a limited role. In practice, however, the u nion government has been a prime mover of health policy and planning, as well as d esigning key public health programmes. However, it has not matched this interest in policy and planning with commensurate funding or budget support. Under the NRHM strategy it has made some efforts at raising its financial stake in the public health sector but (UT) governments as a percentage of their total health budget has declined. While in the six-year period, the overall central health allocation increased grants to states and UTs by 2.68 times, including the north-east, special grants increased by only 1.38 times. This is a clear indication that the centre is retaining a larger proportion of funds in the health ministry for its direct use as is evidenced by the fact that for the same period its net health allocations grew by a whopping 4.17 times. As we will see in the NRHM-related expenditure this is largely due to the flexi pool funds which the centre spends at its

However, to the central government’s credit it is clear that their share in the total public health budget has improved from 15.84% in 2004-05 to 27.91% in 2009-10. But since grants to state and UT governments have declined substantially from 21.4% of the state governments’ health budget share to a mere 14.5%, the increase in the centre’s share only reflects its greater control over health resources.

In Table 2, we see the trajectory of key central government health spending. Clinical services have increased 3.5 times from 2004-05 to 2009-10, whereas investment in medical education and research has

Table 2: Allocations for Selected Key Programmes in the Union Health Budget (Rs crore #)

Programme BE 2004-05 BE 2005-06 BE 2006-07 BE 2007-08 RE 2008-09 BE 2009-10 Feb BE 2009-10 July

they have so far failed. First, because they Hospitals and disps 240.75 309.79 263.25 261.40 495.67 482.50 844.83
encountered the problem of fungibility Medical education and research 912.82 1,360.78 1436.64 1,520.41 2,731.67 2,720.07 3,861.94
with the states (i e, the union government AYUSH 225.73 405.98 447.89 563.88 649.50 775.40 922.00
increased its allocations but the state NACO – HIV/AIDS 232.00 476.50 636.67 719.50 1016.36 993 993

RCH + flexipool 710.51 1,380.68 1765.83 1,672.20 9.25+2,728.3 99.5+2,322.5 99.5+3,048.49

governments used the larger resources for

Pulse polio 1,004.00 1,289.38 1,129.74 1,102.89 1,102.89

replacing their own resources), and, second, 1,186.40 1,304.60

Routine immunisation 326.50 300.50 232.60 388.21 388.21

the union government took larger control

FW services and contraception 1,948.71 2,412.41 1,942.61 2,295 2,768.36 2,863.58 2,862.83

of health resources by raising the propor-

NRH mission flexible funds 1,530.88 2,682.72 2,263.25 2,051.92 3,033.67 tion of the budget within its discretionary # 1 crore = 10 million.

Source: Demand for Grants, respective Budget years, Ministry of Finance, GOI, New Delhi.

control, like creating flexi pools, thereby subverting the decentralisation processes. discretion, and is clearly indicative of the quadrupled due to allocations for the Thus, the increased resources from the growing centralisation of the health u pgradation of some state institutions to central pool did not translate into an over-budget. Further, the state/UT government the All India Institute of Medical Services all increase in support to public health. Let budgets for health during this period just (AIIMS) level status. AYUSH (ayurveda, us now look at the budget data compiled in about doubled, but they were lower as a yoga, unani, siddhi and homeopathy) has Table 1 through 3 to explain the malaise proportion of the t otal state/UT govern-received more attention with a fourfold afflicting health budgets in India. ment budgets, perhaps due to the fungi-increase in support. While HIV/AIDS

bility issue we discussed above. Also as a through National Aids Control O rganisation The Malaise proportion of GDP public health budget (NACO) has also seen a 4.3 times growth in Table 1 provides clear evidence that post allocations more or less stagnated below allocations, immunisation has lagged at NRHM, the proportion of grants received 1%, though the target was to triple it to just 1.25 times perhaps not even keeping from the centre by state and union t erritory 3% of the GDP. pace with inflation. Within immunisation,

Table 1: Demand for Grants of Ministry of Health and Family Welfare (Rs crore#) pulse polio accounts for 74%

Category BE 2004-05 Actuals BE 2005-06 RE 2005-06 BE 2006-07 BE 2007-08 RE 2008-09 BE 2009-10 BE 2009-10 of the budget clearly 2004-05 (February) (July)

r eflecting a neglect of rou

1 Central health, FW

tine immunisation. The

and Ayush 8,438.12 8,086.46 10,733.54 10,086.26 13,081.82 15,856 18,476 18,808 22,641

2 Of which grants to 4,487.77 3,775.09 4,969.12 3,780.15 5,078.98 5,196 5,497.70 5,937.76 6,182.71 NFHS-3 results have clearly states and UTs including (748.10) (968.20) (880.00) (11,68.80) (1,373.50) (1,560) (1,560) (1,953.40) shown poor progress on this NE component [0.94] [0.75] [0.97] [0.74] [0.90] [0.75] [0.61] [0.62] [0.60]

front. For all basic vaccines

3 Net health central 3,950.35 4,311.37 5,764.42 6,306.11 8,002.84 10,660 12,978.30 12,870.24 16,458.29

the coverage is only 44%, in

government (1-2) [0.83] [0.86] [1.12] [1.24] [1.41] [1.53] [1.44] [1.35] [1.61]

cluding polio, and in urban

4 State/UT govt health 20,982.24 21,465.19 24,336.63 25,479 29,137 31,383 38,582.97 42,500* 42,500* and FW (including 2) [4.36] [4.32] [4.57] [4.19] [4.36] [4.10] [4.21] areas it showed a decline of

5 Grant as % of state
HFW total 21.39 17.59 20.42 14.84 17.43 16.56 14.25 13.97* 14.55*
6 Total health (3+4) 24,932.59 25,776.56 30101.05 31,785.11 37,139.84 42,043 51,561.27 55,370.24 58,958.29
as % GDP@ 0.80 0.82 0.84 0.89 0.90 0.90 0.96* 0.94* 1.01*

Figures in parentheses is NE (north-east region) component and in square brackets % to respective Total Budget or Expenditure. BE = Budget Estimate, RE= Revised Estimate; @ GDP at market prices from RBI – Handbook of Statistics, RBI, Mumbai, 2008. Source:Expenditure Budget Volume 1 2006-07 and 2007-08 (Demand Nos 46 and 47), Ministry of Finance, GOI, New Delhi, 2006/2007. For 2004-05 BE from Expenditure Budget Volume 1 2005-06 and actuals 2004-05 from Annual Financial Statement 2006-07. For 2008-09 and 2009-10 (Feb) and 2009-10 (July) Expenditure Budget Volume 1 2009-10 (February and July) (Demand Nos 46, 47 and 48), Ministry of Finance, GOI, New Delhi, 2009. For State/UT governments from RBI – State Finances 2005-06, 2006-07, 2007-08, 2008-09, RBI, Mumbai, 2007/2008/2009. * estimated by author; # 1 crore = 10 million.

Economic & Political Weekly

august 15, 2009 vol xliv no 33

three points from 60% to 57% between NFHS-2 and NFHS-3. The other big grosser in the centre’s health budget is Reproductive and Child Health (RCH) which has grown by 4.4 times. But family


welfare services and contraception has seen expenditures in health were over-spent by t For drug procurement out of the Rs 2,000 a slower growth at only 1.5 times during 2.6%. The appropriation a ccounts give an million budgeted a whopping Rs 1,780 this six-year period. itemised list of minor heads/programmes million was not utilised under a World

When we look at the NRHM component under which there was under-expenditure Bank-funded initiative. of the central budget (Table 3), including or over-spending. Some of the key high-t Under routine immunisation Rs 960 grants to the state and UT governments lights from the 2007-08 a ppropriation ac-million out of Rs 2,770 million was unutiwe find that over a five-year period, NRHM counts are given below: lised, whereas for pulse polio Rs 3.23 b illion allocations have barely doubled (and t Under the special grants for NE states out of Rs 12.58 billion remained unused. NRHM grants to state and UT governments Rs 13.73 billion was allocated in the budget This unutilised money was used as

shown below:

Table 3: NRHM Component of the Union Health Budget (Rs crore #)

NRHM component of major heads RE 2005-06 BE 2006-07 BE 2007-08 RE 2008-09 BE 2009-10 Feb BE 2009-10 July

Disease programmes 648.59 755.64 884.06 915.62 1,048.02 1,063.02
AYUSH 45.00 65.00 108.00 124.50 126.00 176.00
Family welfare, including RCH 5,426.58 7,386.26 8,954.94 9,883.90 9,758.98 11,249.97
NE region special scheme 668.04 891.53 1,387.50 1,560 1,560 1,953.40
NRHM total 6,788.21 9,098.43 11,333.56 12,484.02 12,493 14,442.39
of which Grants to states, UTs and NE 3,410.75 4,496.20 5,243.16 5,708.13 5,696.16

# 1 crore = 10 million. Source: Demand for Grants Budget 2006-07 and 2009-10 (February and July), Ministry of Finance, GOI, New Delhi, 2006/2009.

have grown even less at 1.6 times), so the great hype about NRHM is misleading. Within NRHM the larger increases have been for AUYSH and RCH/FW (family w elfare), whereas the disease programmes (excluding HIV/AIDS), which include key diseases of poverty like TB, malaria, and the diarroeheal diseases have suffered with a marginal growth of only 1.6 times. In fact, the non-NRHM budget of the central government has seen a much greater increase due to NACO and medical education investments. Thus in budgetary terms the NRHM flagship is indeed sinking.

Further, we also need to look beyond budget figures at actual utilisation of r esources in order to get a deeper insight into the use of public health budgets. When we look at actual expenditures and the appropriation accounts it becomes clear that there is a lack of concern for public health matters, especially those programmes which can benefit the large m ajority of poor and underserved. We looked at the finance (Government of India 2009) and appropriation accounts (ibid) of 2007-08 to assess actual expenditures.

Underutilised Funds

The assessment reveals that overall the under-spending on the revenue account of the ministry of health and family welfare was Rs 20.35 billion,4 and of this Rs 15.20 billion was from the plan grants which the union government gives to the sub-national governments. Of the latter, 90% was from the north-east (NE) states special grants. In fact, the union government’s own direct and Rs 3.84 billion was released to the state governments and only a fraction of this, that is a mere Rs 76 million was spent. t Under NRHM for NE states Rs 4.72 b illion from Mission Flexi pool, Rs 2.48 billion from RCH Flexi pool, Rs 0.67 billion from various disease control programmes, Rs 0.52 billion from pulse polio and Rs 0.16 billion from routine immunisation were underspent. t From the non-NRHM component in the NE states Rs 1.2 billion from the AIDS programme and Rs 4.99 billion from the medical education and research programme were unutilised. t Under the RCH programme from grants to state governments Rs 1.78 billion was u nderspent and under disease surveillance Rs 320 million unutilised. t For vector-borne diseases the budget of Rs 1.67 billion was augmented to Rs 4.47 billion through a supplementary grant but an amount of Rs 430 million remained unutilised. t Under the National Mental Health Programme out of a budget of Rs 580 million 74% or Rs 430 million was unutilised. t Under the tobacco-free initiative, a f avourite of the previous health minister, out of Rs 320 million budgeted, Rs 180 million remained unused. t Under capacity building programmes for states Rs 300 million out of Rs 680 million remained unutilised, and for capacity building for the food and drug administration department as much as Rs 440 m illion out of Rs 520 million budgeted was unutilised.

august 15, 2009

t Rs 1,020 million excess use by Central Government Health Scheme, Rs 230 million by Safdarjung Hospital and Rs 300 million by Post Graduate Insitute of M edcial Research. t NACO used an excess of Rs 2,260 million, Indian Council of Medical Research Rs 320 million, sub-centres Rs 1,900 million and blindness control Rs 360 million.

From the above it is amply evident that from some of the government’s own key priority programmes under NRHM like immunisation, RCH and flexi pool funding a large volume of resources remained unutilised and this, in turn, affected performance and outcomes. Some bureaucrats at the top o ften blame this on poor absorption capa city of states and therefore o ppose increased budgets for health. This is not true b ecause at the level of delivery of care there is a crying demand for resources. The community monitoring of NRHM b eing done in partnership with civil society has clearly brought out the inadequate performance of NRHM activities. The same problems continue, like inadequate drug supplies, non-availability of medical and paramedical staff, poor utilisation of u ntied funds, poor quality of primary health centre (PHC) services and non- cooperative behaviour of the staff. The positive points are: a few improvements in ANC, immunisation and the J anani Suraksha Yojana.5

The problem therefore is not the absorption capacity but the bureaucracy itself which does not have the capacity to plan and budget in a way that can meet the demands of the people. Further, the central and state bureaucracies are unwilling to let loose their control over the healthcare delivery system, despite a lot of talk about decentralisation. They may allow decentralised planning through the panchayats and even provide some untied funds for the direct use by the latter, but they will never transfer fiscal, governance and management

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autonomy and control to units who directly provide care. This is where the problem lies in resource allocation and use. Those who deliver care, who understand and know the situation and hence can plan and budget the resources, have no role in decisionmaking and those who govern from the state and national capitals take all decisions without having a clue to what the ground realities are. This is the reason why the NRHM has failed to make the architectural corrections that it wanted to make. It is clear that unless radical changes in budgetary and financing mechanisms are put in place by granting full autonomy to those who directly run the public health system, the NRHM flagship will continue to sink.


1 Budget Speech of Finance Minister 2009-10,, accessed 6 July 2009.

2 If we use $1 per capita per day as the benchmark then it should be over 80 million families.

3 Contrast this with the 34% increase over previous fiscal for the defence budget.

4 We must note that this is the overall underspending, which is the balancing figure, but across programmes there are various kinds of adjustments made and this is reflected in the highlights e xtracted from the Appropriation Accounts.

5 SATHI 2008: Report of First Phase of Community Based Monitoring of Health Services under NRHM




in Maharashtra, SATHI, Pune. Such monitoring is happening across 10 states and all are reporting more or less similar results that show that NRHM on the ground is not sailing smoothly.


World Health Report (2008): Primary Health Care Now More Than Ever (Geneva: WHO).

– (2007): World Health Statistics 2007 (Geneva: WHO).

Government of India (2008): National Family Health Survey-3 India Report (New Delhi: Ministry of Health and Family Welfare).

  • (2009a): Finance Accounts of the Union Government 2007-08 (New Delhi: Controller General of A ccounts).
  • (2009b): Appropriation Accounts of the Union Government 2007-08 (New Delhi: Controller General of Accounts).
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    Economic & Political Weekly

    august 15, 2009 vol xliv no 33

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