By: Rieshav Chakraborty

Abstract

India’s Budget 2024 for the health sector shows an increase in total allocation. However, this analysis reveals a different picture when adjusted for inflation. The budget for the Department of Health and Family Welfare, responsible for crucial public health initiatives, has decreased in real terms.

This paper examines specific areas where the budget allocation has fallen short. These include critical programs like Pradhan Mantri Swasthya Suraksha Yojana (PMSSY) for medical college development, National Center for Disease Control (NCDC) expansion, and research funding for the Indian Council of Medical Research (ICMR). Additionally, despite the government’s emphasis on the Pradhan Mantri Jan Arogya Yojana (PMJAY) health insurance scheme, concerns persist regarding infrastructure development and financial support for private healthcare providers. The paper also explores the ongoing challenge of Out-of-Pocket Expenditure (OOPE) for Indian citizens.

While the budget allocates funds for nutrition programs like Poshan 2.0 and Saksham Anganwadi, even this increase fails to keep pace with inflation. The paper concludes by highlighting the lack of clarity regarding the government’s plans to include the HPV vaccine for cervical cancer prevention in the national immunisation program.

Introduction

Effective budgeting in the healthcare sector is crucial, especially in densely populated nations like India, which face additional challenges due to the recent pandemic. With a population exceeding 1.4 billion, allocating resources efficiently becomes essential to ensure comprehensive healthcare coverage and effective disease prevention strategies.

The Ministry comprises two main departments: the Department of Health and Family Welfare, which implements public health programs and regulates medical education, and the Department of Health Research, which conducts medical research. The Department of Health and Family Welfare oversees the National Health Mission, which receives most of the Ministry’s budget. This mission includes funding state-level initiatives like strengthening healthcare infrastructure, addressing human resources requirements, supporting medical education, and facilitating COVID-19 vaccination campaigns.

From the fiscal year 2012-13 to 2023-24, the budget for the Department of Health and Family Welfare has continuously expanded by an annual rate of 12%, rising from Rs 25,133 crore to Rs 86,175 crore. This significant growth highlights the government’s dedication to strengthening resources for healthcare initiatives. Additionally, the Budget for 2024–25 allocates Rs 87,656 crore for health, aimed at improving access to healthcare services and infrastructure across India.

Source: CDPP 

Although there appears to be a rise in the budget allocation for health in the fiscal year 2024-25, when adjusted for a modest 5% inflation rate, there is a decrease of 3.17%. Consequently, in real terms, the budget for the Department of Health and Family Welfare has decreased.

Ayushman Bharat

The introduction of the Pradhan Mantri Ayushman Bharat Health Infrastructure Mission (PM-ABHIM) took place in 2021, following the significant impact of the second wave of the COVID-19 pandemic. The initiative was designed to prepare the country for potential future pandemics. 

Initially, the plan aimed to disburse Rs 64,000 crore over five years. However, the allocation witnessed a decrease compared to the previous year’s budget estimates. For the fiscal year 2024-25, it has been allocated Rs 4,107 crore, down from Rs 4,200 crore allocated last year.

National Center for Disease Control (NCDC)

The government has initiated a program aimed at expanding the National Center for Disease Control (NCDC) by establishing additional branches. Presently, there is only one branch located in Delhi. The NCDC was expected to play a crucial role during the pandemic.

Within this initiative, the government also intended to address zoonotic diseases (those transmitted from animals to humans) and enhance efforts to combat antimicrobial resistance (AMR). India currently bears the highest burden of AMR globally. However, the allocation for this initiative has been reduced from Rs 55.52 crore to Rs 52 crore.

Pradhan Mantri Swasthva Suraksha Yojana (PMSSY)

One of the significant programs affected by the Budget was the Pradhan Mantri Swasthya Suraksha Yojana, administered by the Department of Health and Family Welfare. According to the official documentation, the PMSSY aims to enhance tertiary healthcare capacity in medical education, research, and clinical care within underserved regions of the country.

In the fiscal year 2024-25, the scheme has been granted Rs 2,400 crore, a decrease from the budget estimate of Rs 3,365 crore for the previous financial year. This marks a decline of 33%, not factoring in inflation.

The scheme aims to modernise existing medical colleges throughout India and construct new institutions resembling AIIMS. Among these, six were initially proposed during the Atal Bihari Vajpayee-led government, while another 16 were conceptualized under the Narendra Modi-led government, which assumed power in 2014.

Despite the government’s repeated assertions that establishing new AIIMS-like institutions stands as one of its major accomplishments, a parliamentary response from last year revealed that none of the 16 institutes proposed since 2014 are fully operational yet. Additionally, the budget allocation for these projects has now been reduced.

Within the budget document, there is a distinct category titled “Establishment Expenditure of New AIIMS,” designated for covering the establishment costs of 22 new AIIMS facilities across various states. According to the document, the budget estimates for fiscal year 2024-25 under this category have decreased to Rs 6,800 crore from the previous year’s budget estimate of Rs 6,835 crore.

Indian Council of Medical Research (ICMR)

The Indian Council of Medical Research (ICMR), a leading research institution in health and science under the Department of Health Research, has been assigned a budget of Rs 2,432 crore for the fiscal year 2024-25, compared to Rs 2,360 crore allocated last year. Although this appears as an increase in absolute terms, adjusting for a 5% inflation rate reveals a decrease of 1.87%.

National Aids and Sexually Transmitted Diseases Control Programme

The budget allocation for the National AIDS and Sexually Transmitted Diseases (STDs) Control Program decreased to Rs 3,049 crore for the fiscal year 2024-25, marking a 1% decline compared to the previous year’s allocation. However, when adjusted for inflation, the shortfall exceeds 5%.

Pradhan Mantri Jan Arogya Yojana (PMJAY)

The Pradhan Mantri Jan Arogya Yojana (PMJAY) is a public health insurance scheme designed to mitigate Out-of-Pocket Expenditure (OOPE). It offers health insurance coverage of up to five lakh rupees to families based on eligibility criteria determined by the Socio-Economic Caste Census, 2011 (SECC). These criteria encompass factors such as occupation, housing access, and demographics. The scheme covers an estimated 13 crore families, comprising 65 crore individuals. Eligible families receive an Ayushman Card, providing access to treatment in designated hospitals.

Currently, the PMJAY scheme has extended coverage to 40% of India’s families. The insurance premium is funded by both the Central and state governments as it falls under a centrally sponsored scheme. For the fiscal year 2024-25, the scheme has been allocated Rs 7,500 crore, compared to Rs 7,200 crore in the previous fiscal year (budget estimates).

Despite being lauded by the government as a significant scheme, PMJAY faces criticism for its perceived lack of efforts in infrastructure development and financial support for private healthcare providers. In response, the government highlights its establishment of over 1.5 lakh health and wellness centers. However, last year, the Comptroller and Auditor General identified various forms of corruption at multiple levels within the scheme, leading to financial losses and undermining its objectives.

Out of Pocket Expenditure (OOPE)

Healthcare funding in India stems from government allocations at both central and state levels, as well as contributions from charitable institutions or individuals. 

38.8% of the population is unprotected from any Health Insurance however, 2/3rd of the insured population are under-insured where limited procedures are covered. Thus, individuals shoulder a significant portion of healthcare expenses, termed as out-of-pocket expenditure (OOPE), which is notably higher in India in comparison to other countries. The modest public investment in healthcare has led to a pronounced dependence on private healthcare providers, often correlated with elevated expenses.

Despite a decrease in Out-of-Pocket Expenditure (OOPE) as a percentage of Total Health Expenditure from 62.6% in 2014-15 to 47.1% in 2019-20 (Ministry of Health and Family Welfare, 2023), the rate remains high.

Nutrition

The Ministry of Women and Child Development oversees nutrition schemes. The Poshan 2.0 and Saksham Anganwadi scheme aims to foster practices that promote health, wellness, and immunity among malnourished individuals. India is home to one of the largest populations of malnourished children globally.

For the fiscal year 2024-25, the scheme has been granted Rs 21,200 crore, marking an increase from the previous financial year’s budget estimate of Rs 20,554.31 crore. However, when adjusted for a 5% inflation rate, this allocation represents a decrease of 1.77%.

Cervical Cancer 

During her budget speech, the finance minister mentioned the government’s intention to “encourage” girls aged 9-14 years to receive the HPV vaccine for cervical cancer prevention. However, she did not clarify whether the HPV vaccine would be integrated into the government’s routine immunisation program. This lack of clarity arises despite the government’s recent statement, just a few days prior, indicating that there were no immediate plans to introduce the vaccine in such a manner later in the year.

Conclusion

While Budget 2024 for the health sector in India appears to show an increase in total allocation, a closer examination reveals a concerning reality. After adjusting for inflation, the budget for the Department of Health and Family Welfare, responsible for crucial public health initiatives, has actually decreased. This decrease impacts critical programs like medical college development, disease control efforts, and medical research.

Furthermore, the focus on flagship schemes like PMJAY, while commendable, raises concerns about inadequate infrastructure development and support for private healthcare providers. The burden of Out-of-Pocket Expenditure (OOPE) remains significant for a large portion of the population. The rise in budgetary allocation for nutrition programs is a positive step, but inflation negates a significant portion of the increase. Additionally, the lack of clarity regarding the inclusion of the HPV vaccine in the national immunization program creates uncertainty for a crucial preventive measure.

Budget 2024 falls short of comprehensively addressing India’s healthcare needs. To ensure effective healthcare delivery and disease prevention, the government must prioritize increased real spending, address infrastructure deficiencies, and provide clarity on critical public health initiatives.

About the author

Rieshav Chakraborty is a 2nd -year student at the Jindal School of Government and Public Policy, pursuing BA (Hons) Economics. His research interests include Behavioral Economics, Environmental Economics, and Development Economics.

Image Source: IBEF