Did The Modi Government Cut Health Spend?

Did The Modi Government Cut Health Spend?

The alarm over the government slashing health budget may have been premature.

By Arunabh Saikia

Published on :

Ever since we carried this story by India Spend (our content partners), we have received multiple mails and tweets, questioning the authenticity of the story. The story headlined “Facing Health Crises, India Slashes Spend”, quoted a Reuters report, “India slashes health budget, already one of the world’s lowest”.

In light of the many concerns and queries, we figured it is only fair that we put out a story that puts thing in perspective and clarifies the issue.

The India Spend report – and the Reuters report – states that the government has ordered a cut of nearly 20 per cent in its 2014/15 healthcare budget owing to fiscal strains.  However, several people have refuted the contention. On Twitter too, where the Reuters story had gone viral with almost a 1,000 shares – there have been several heated arguments.  Detractors of the government have questioned its intent to tackle the issue of public health.

So was there a “budget cut”? Or more critically, has the country’s public health been compromised? The matter is nuanced and answering it in a binary would amount to undermining its seriousness.

Here it is important to understand a few basics about how budgetary allocations work in our country.

The first is the “budget estimate”. The budget estimate for any ministry is the amount allocated to it in the budget papers for the following year. For instance, in this case, Arun Jaitley made a budget estimate of Rs 30,645 crore, while releasing the 2014-15 budget in July, 2014.

This amount, for the record, is five per cent more than what was allocated by the previous government for the 2013-14.

The budget estimate, now, may not be enough for a particular ministry. Or, for that matter, may be more than what a ministry has the wherewithal to deploy. That leads to a “revised estimate” in around December (which is financial mid-year) that quotes an updated figure (according to the situation). Unfortunately, as Mint has pointed out, as many as 10 ministries haven’t even spent 30 per cent of the initial budget estimate.

According to a Lok Sabha document, only about 25 per cent of the allocation on health has been used till October 2014. No, that’s not because public health is hunky-dory in India. The reason is absorption of funds. Which essentially means that there is a serious scarcity of structures to utilise funds. As this Planning Commission document reveals, reasons for this includes weak development of partnerships with non-governmental agencies and the private sector. In fact, increased absorption trends are often a result of higher salaries and not necessarily because of better structures that facilitate better usage of funds.

So, it is perhaps unfair to claim that the reported slash in the revised estimates means a lack of intent on the government’s part to improve public health in India.

To further reiterate, the 2012-13 revised estimate, under the United Progressive Alliance – 2, also saw a cut of more than 18 per cent compared to the initial budget estimate. However, the next budget (2013-14) saw an increased estimate of more than three per cent than the previous year. Which means that cuts in revised estimates are more practical than sinister. Of course, it is beyond calamitous that we don’t have the required structure to utilise our funds efficiently and that we spend only one per cent of our gross domestic product on public health. That, though, is another story.

Notably, Reuters based its story on two anonymous quotes of two health ministry officials. There was no mention in the copy about revised estimates.

Following up on the Reuters report, many news organisations – including Newslaundry – carried reports, which seem to suggest, as pointed out by many people, that Prime Minister Narendra Modi’s government will cut India’s health budget by 20 per cent. That, we admit, is not the truth and premature to say the least.