As the pandemic hit, how much did India spend on health?

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When the Covid-19 pandemic erupted last year, it caught the world, and India, by surprise. No one knew what the treatment protocol for the unknown disease was. Most countries were short of masks, personal protective equipment (PPE) kits, and testing kits that would form the first line of defence, and hospital beds, oxygen units, and ventilators that would form the second.

A year later, as India faced its second wave of infections, the most severe in the world so far in terms of daily cases, the supply constraints only worsened. Everything from testing kits to hospital beds, oxygen to ventilators, medicines to ambulances have seemed to be in short supply.

Was India ill-prepared for this calamity? A good way to answer this question is to look at government spending (for both the Union and states), on health from 2019-20 to 2021-22.

Union government’s health spending

Although 2020-21 has come to an end, we do not have the final numbers on government spending yet. What we have so far are provisional spending numbers from the Controller General of Accounts (CGA), which works under the ministry of finance.

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The headline numbers do not impress. In 2019-20, the ministry of health and family welfare spent 64257.8 crore. This amount was increased by just 4.4% in the 2020-21 budget estimates (BE), which were presented before the pandemic hit India. Health spending in 2020-21 was increased to 82,928.3 crore according to the revised estimates (RE) presented with the 2021-22 Budget.

If the CGA numbers are any indication, 2,234.4 crore, or about 3% of the revised estimate, will remain unspent. The total allocation for the ministry of health in 2021-22 (BE) is lower than the 2020-21 (RE) numbers.

State government health spending

The Centre for Monitoring Indian Economy (CMIE) database has health spending numbers from 2019-20 to 2021-22 for 24 states. Unlike central government expenditure, there is no CGA like body which has recent updates on state government expenditure. In 2019-20, these states spent 1.34 lakh crore on health (medical and public health under social services). This was expected to increase to 1.64 lakh crore in 2020-21, as per budget estimates. This number was revised to 1.69 lakh crore as per the revised estimates published in 2021-22. These 24 states are expected to spend 1.9 lakh crore on health in 2021-22.

The actual spending in 2020-21 will only be known when the actual estimates are published in 2021-22. States spend more than the Union when it comes to both revenue and capital spending.

Capital spending on health

The trend in capital spending on health by the Union government that will include creation of new health facilities is revealing. It was a paltry 1666.9 crore in 2019-20. The 2020-21 BE numbers reduced it to 1065.7 crore, which was revised upwards to 4233.5 crore in 2020-21 RE numbers. However, only 3586.99 crore (or only 85% of the RE) has been spent by March, according to provisional figures by the CGA.

The headline 97% number of the ministry of health is driven entirely by the 98% utilisation of revenue expenditure which made up 96% of the ministry’s total expenditure. Revenue expenditure is for recurring expenses such as paying salaries. The 2021-22 BE figure for capital spending is lower than both 2021 RE and provisional estimates put it at 2509 crore.

The 24 states, for which data is available, have a higher capital spending on health than the centre. They spent 12256.7 crore in 2019-20. The 2020-21 BE number for this head was 20787.2 crore. However, this was slashed marginally to 20177.4 crore in the 2020-21 RE numbers.

Many experts have pointed that the states have been forced to cut back on capital spending due to the pandemic’s economic disruption. The 2021-22 BE figures on capital spending health by these states is 29872.7 crore.

When read with the shortfall of 600 in states’ capital spending as per 2020-21 BE and RE numbers, the overall rise in capital spending on health after the pandemic hit India is abysmally low. It is no wonder that the health infrastructure has been on the verge of collapse as the second wave rages through India.

Not everyone is equally guilty for the poor health spending

Some states devoted a greater share of their expenses to health in 2021-22 than others. Delhi, for instance, spent 12.4% of its budget on health according to the RE figures for 2021-22, over five percentage points higher than Assam, the next big state that used the most share of its expenditure for health. In comparison, the Union government allocated 2.4% of its budget to the ministry of health and family welfare.

The only state – among the 24 for which data is available with CMIE – which spent less than this number is Telangana, which spent 2.39%. 12 states spent over 5% of their budget on health. Another nine states spent 4%-5% of their expenditure on health.

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