Healthcare Budget 21-22: More needs to be done

Did the Budget deliver on the expectations of stakeholders and healthcare users? The answer is only a partial yes.

Given that the country is just emerging from a pandemic which highlighted the inadequacies and weaknesses of our healthcare system, the Union Budget 2021 was expected to have a key focus on healthcare. Various stakeholders reiterated the need to significantly strengthen healthcare in the country through major investments in healthcare infrastructure and adequate funding to existing schemes so as to continue to build on these initiatives and to create future ready systems. 

Did the Budget deliver on the expectations of stakeholders and healthcare users? The answer is only a partial yes.

Healthcare push?

The Finance Minister (FM) in her Budget speech identified Health and Well-being as one of the six pillars underpinning the Budget proposals, setting a positive tone for the industry. She further postulated that healthcare should not be looked at in isolation and needs a holistic approach. This was something that health experts have been looking forward to for a long time, and the FM said that this government endorses such a holistic approach. 

The FM announced a new centrally sponsored scheme called PM AtmaNirbhar Swasth Bharat Yojana with an outlay of approximately INR 641 billion over the course of the next six years. 

  • Setting up integrated public health labs in all districts and 3382 block public health units across 11 states. This is a much-needed step as witnessed during COVID times when conducting diagnostic tests in underserved small towns and villages was a huge challenge due to inadequate facilities in these areas.
  • Strengthening of National Centre for Disease Control (NCDC), its branches and surveillance units. This coupled with setting up 4 regional National Virology Institutes are a significant step in preparing for future pandemics/healthcare exigencies. 
  • Establishing critical care hospital blocks in 602 districts and 12 central institutions, which is a crucial step towards creating tertiary care facilities at district levels. COVID-19 has highlighted this need with extensive requirements for ICU beds in the semi-urban and rural areas.

Overall, this scheme provides a boost to healthcare infrastructure creation in the country and strengthens our capability to deliver quality care. It is important to note that this scheme is in addition to existing schemes like the PM-JAY and the National Health Mission. This indicates the considerable effort to augment healthcare in the country with a renewed focus on infrastructure creation.

A holistic approach to healthcare is welcome, but more needs to be done

Indicating the holistic approach to healthcare, significant outlays were announced for clean drinking water schemes, nutrition schemes and for the first time, a dedicated outlay to reduce air pollution in urban areas having population of more than one million residents. Additionally, the Pneumococcal Vaccine, which was currently limited to only 5 states, will now be rolled out across the country. The move is expected to prevent more than 50,000 child deaths annually. The FM also mentioned tabling the National Commission for Allied Healthcare Professionals Bill to facilitate the regulation for 56 allied healthcare professionals. COVID-19 highlighted the vast need of nursing resources in the country, and the National Nursing and Midwifery Commission Bill that will be introduced by the government is expected to help bring transparency, efficiency, and reforms in the nursing sector.

The government reiterated that healthcare cannot be viewed with the narrow prism of medical health and needs to be more holistic. This is crucial, not just from a sound public health policy perspective, but also from a universal healthcare perspective. However, the expectation of big bang reforms and spending spree in healthcare post-COVID has been left unaddressed.

The devil in the details – the healthcare budget needs some context

The FM was very happy to highlight the 137% increase in the healthcare budget estimates from FY 2020-2021 to FY 2021-22. A closer look at the numbers does raise some questions and highlights continuing gaps/needs. The total outlay for FY 2021-22 is roughly ~INR 2.24 trillion. However, it includes a variety of other expenditures which would not occur in a normal year. For instance, the healthcare budget allocates INR 350 billion for vaccines or 16% of the overall healthcare budget, which is arguably a one-time expenditure. Although, this will free up the states to focus on strengthening their supply chains and delivery, this allocation is a follow-up to the central government initiative, which since January 2021, has spent approximately INR 3.6 billion on vaccines for healthcare and frontline workers. It is also crucial to note the distinction between healthcare budget and outlays for water and sanitation. 

The department of water and sanitation was allocated INR 215 billion last year, which has seen a more than quadruple increase to a massive INR 960 billion in this budget. Hence, out of the ~INR 2.24 trillion allocation, 43% of the budget is not directly healthcare related. Additionally, the allocation for nutrition has actually decreased by ~27%, which is crucial to note from the perspective that we still have a long way to go in providing adequate nutrition to children under the age of 5.

The Department of Health and Family Welfare (DoHFW) has received a nominal increase of ~11% from previous year but has declined by 10% if the revised estimates of last year were to be considered. One of the biggest schemes of the DoHFW, the National Health Mission (NHM) will only receive a nominal 4% increase next year when compared to the revised estimates of last year. The flagship insurance scheme of PM-JAY has seen an allocation of INR 64 billion, the same as last year. Hence, the headline grabbing number of 137% increase in the healthcare budget needs some context before we can go out and celebrate.

The long term view

The Budget has laid out a broad blueprint of how the healthcare in the country will be approached from a public health perspective. The allocation to building connected healthcare systems from the primary care center to the district tertiary hospital is a significant step in right direction. With the emphasis on clean drinking water and sanitation, the government is trying to look at the preventive side of healthcare as well. It is crucial that the one-time expenditure for vaccines is reallocated to some other key development initiatives next year and treat this year’s expenditure as a base to be built upon. It is clear that public expenditure on health still needs to be increased substantially as outlined in the National Health Policy 2017. The recent Economic Survey released before the Budget outlined that if the long-term healthcare expenditure can be increased to 2.5-3% of the GDP, the Out-of-Pocket Expenditure (OoPE) will halve to almost 30% from the current 65%. This saving can then be utilized in more productive areas such as wealth creation, which will benefit the individual and overall economic growth.


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