Increase State Budget Allocation On Healthcare

Before Union Finance Minister Arun Jaitley presented the Union Budget for the fiscal year 2014-15; Dipankar Gupta wrote an article in Times of India called ‘get well first, get wealthy next’. He appealed for Healthcare to be taken as a priority by the new Central Government and be given the status of an Industry. 

Soon after, the Union Budget was presented and it evoked mixed response from commentators. The government plans to provide free drugs and free diagnostics. Other key features of the budget include expansion of insurance coverage through FDI; setting up of AIIMS-like institutions, drug testing laboratories, rural health research centres; and increased excise duty on cigarettes.

The increase in taxation of tobacco products is a welcome move and so are the new proposals. However, budget allocation did not measure up to the planned initiatives. As per Economic Survey 2013-14, only 1.4% of the GDP is spent on healthcare which is among the lowest in the world. The national newspapers published a few days after the Budget highlighted that the Health Sector allocation for 2014-15 was increased by only 5% from 2013-14. Therefore, there is the question of where the resources will come to meet the initiatives proposed. High Level Expert Group formed by the Planning Commission and other experts have been recommending the government to increase GDP spending to 2.5%. But this has not happened this time around.

State budget allocation on Healthcare as percentage of its total expenditure has been on the decreasing trend. As per the State Human Development Report 2004, Nagaland spent 9.6% of its total expenditure on Health in 1980-81. In 1990-91, this was reduced to 6.3%. In 2010-11, this was further reduced to 3.8% and for 2013-14, the figure stood at a meager 2.9%. One likely explanation for reduced spending on Health could be the Structural Adjustment Policy of the central government in the early 90’s where spending on the social sectors were cut. Another explanation after 2005 could be the arrival of National Rural Health Mission (now, National Health Mission). However, NRHM was envisaged as a support arm of the general health services only. NHM is a mission and the interventions under NHM are focused on targeted and specific areas, while the basic health service delivery continues to be in the hands of the State. The inputs of NRHM/NHM have resulted in positive health outcomes, but it has not realized its full potential due to a weak general health services base. 

Major part of the State allocation goes for salaries. As per the Budget Estimates, about 99% of the State spending (Plan, Non Plan, and CSS/CPS) was on salaries at the level of Sub Centres, Primary Health Centres, and Community Health Centres in the year 2013-14. A more worrying trend is the steeper fall in the percentage of budget allocated to Health under State Plan. This can be masked by the increase in Non Plan which will mostly go as increment in staff salary. In between 2008-09 and 2013-14, the State Plan allocation on Health as percentage of the total Plan allocation has reduced from 4.5% to 0.87% (see chart). Healthcare has been dropping down the priority list of the State Government. Healthcare received less money under State Plan than Youth Resources and Sports in 2013-14. The explanation that NHM may come to the rescue does not hold as the NHM resources envelop has also not expanded significantly. For 2014-15, the approved budget has decreased when compared to 2013-14.

This is one major reason why good healthcare is hard to come by. And as stated earlier, there are important basic needs in the general health services which are not met by any centrally sponsored scheme. Therefore, if good health status is a perquisite for becoming a wealthy society, the State of Nagaland needs to give priority and invest more in healthcare. Significant increase in State spending on Health has the potential to improve health status of the people, even more than what the NRHM has achieved. A good general health services will also enable the support interventions to function more effectively. 

Published in Nagaland Post, Morung Express