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Health Care in the Indian Union Budget 2013-14

Ritu Priya

The health component in the union budget of the Government of India for the year 2013-14 leaves one completely disappointed, especially since there has been serious policy discussion undertaken officially by the Planning Commission at least since 2011 on developing a system for universal health coverage by 2020. This discussion indicated an opportunity for strengthening of the health services and their 'architectural correction', but the budget does not address its central concerns and belies the hopes generated. Given the larger policy environment favouring privatisation and corporatisation, the discussion on universal health coverage also created an apprehension about the direction this 'universal coverage' would take; whether it would be centred on people's health and wellbeing or would it become a mechanism for channelising public funds into hands of the private medical services and industry. The present budget needs to be examined in this light. It also needs to be examined in light of the allocations recommended for mainstreaming and revitalising the knowledge systems other than the dominant allopathy, validating people's knowledge of health and healing practices and strengthening people's participation in health care. This article is divided into two sections that deal with the two major issues of architectural correction-- the relationship of the public and private services and addressing the issues of medical pluralism and the integration of all systems of health and healing. It does so from the perspective of optimal utilisation of all health related knowledge and services for the benefit of health and wellbeing of all, but more so of the most underserved.

We are also aware that health care in a society is about working and living conditions, the quantity of food intake and its quality, environmental sanitation and safety, the emotional and social environment, as well as social support structures available, every day practices related to childcare and home remedies, and about health services by various types of health care providers. The health services form one part of this whole gamut of dimensions that determine the health status of individuals, communities and populations. Other aspects-- such as economic development policies, employment, agriculture, nutrition, food processing, water and sanitation, housing, urban space planning, types of consumption-- also impact on people's health almost directly. Therefore, while the budget as a whole can be examined for its implications for the health and wellbeing for the majority of Indians, here we are commenting only on the allocation for health services, which is what the 12th plan chapter on health and the health budget covers.

Budgetary Allocations on Health Care

The government of India and state governments together spend about 5% of their total budgets on health services, while it ranges from 5 to 15% in most other countries. While most of the high income countries spend from 5-10% of their National Gross Domestic Product (GDP) on health, it was only 0.9% of the National Gross Domestic Product (GDP) in the 10th plan (2002-2007) and increased to 1.04% over the 11th plan (2007-2012). However, this is with a significantly increasing GDP. This comes to approximately Rs. 200 per head per year.

The people of India spend about three times this amount from their own pockets directly for health care. This is what leads to what has been referred to as 'catastrophic medical expenditures', medical costs being a leading cause for indebtedness of households in the country and contributing significantly to financial distress. It has been found to be a major contributory cause of farmers' suicides and the second leading cause of indebtedness. Therefore, shifting from an out-of-pocket medical services system to one which ensures access to health care for all, irrespective of the ability to pay is urgently required.

The countries that have been able to successfully ensure universal health care include high, middle and low income countries. While the expenditure of high income countries on health can bring into question their model of health care; whether they can be viewed as sustainable models for all to emulate. However, what cannot be disputed is the need to increase government spending on health in our country.

What is positive in the 12th plan is increase in the allocation on health services. It promised to increase the public expenditure on health by 34% each year so that by 2020, there would be a substantial increase. If actually utilised, this is likely to bring public spending on health close to Rs. 2000/- per head per year, the figure that a few public health analysts using different methods have come to estimate as the cost of a system of universal access through a public system. The budget for the year 2013-14 is an increase of almost 32% over the previous year's expenditure. However, it is to be noted that this increase is not over the budget allocation but over the actual expenditure. As can be seen in table 1, only about 60% of the 11th plan allocation was actually released and spent. If we see the budget allocation increase, it is only about double. Therefore if the process of release and expenditure remains as it was last year and is not expedited this year, we can expect a doubling of spending, and will then not reach the estimated need of per head expenditure.

The next question is, what will the funds be spent on? Will it be through the public or private services, or a combination of the two? Also central is the nature of services and technology that are chosen as priority to be provided through the universal system. "Studies have shown that the application of new medical technologies extensively and intensively accounts for between a third and two-thirds of the growth in health spending in the US and France" (Savedoff, 2012).


Historical Trends

The low input into the health services since planned development after Independence led to a situation where the private sector in health care overtook the public services in the 1980s. When we succumbed to the global trend of shifting government policy in the 1990s from that of people's welfare to market led development, there has been the further thrust within the private sector towards corporate hospitals and private medical insurance. By the year 2000, it was recognised worldwide that there is a 'market failure' in health care. That the public services are essential was recognised even by the World Bank. The Government of India thereby initiated the National Rural Health Mission (NRHM) in 2005-06 to strengthen public services and ensure accessible, equitable and affordable health care to all in rural areas.  By now, however, 80 per cent of the doctors in the country were practicing in the private sector, 80 per cent of outdoor services were obtained from the private sector and over 50 per cent of indoor admissions too happened in the private sector.

The mindsets of the doctors and general public had been created to believe that public systems could not work as well as private institutions. This belief is contrary to all evidence worldwide that shows that the specialist-led, tertiary-care oriented private hospitals add to unnecessary interventions, thereby unnecessary costs and increasing iatrogenesis, i.e. doctor-generated illness!

The almost completely unregulated private medical services sector is free to engage in all forms of malpractice and negligence as well as to ask for whatever price it wants. The poor and even the middle classes are plagued by the costs of medical services. Medical expenditures have been found to be one of the major causes precipitating farmers’ suicides.

The NRHM has managed to reverse the trend of shift of patients towards the private sector in some small measure by strengthening the public services in several dimensions in almost all states. However, the by now well entrenched private sector is not only not willing to let go but is also attempting to garner more and more for its own profits, actively supported by the international corporations in managed care, medical insurance, pharmaceuticals and human bio-technology. This is where we are at the present juncture.

Questions before the 12th Plan

 The 12th plan document correctly poses the following questions: "In our system, the initial conditions include a large but severely under-funded public sector, a growing but high cost private sector, with serious issues of inadequate quality and coverage in both, and an ineffective regulation. In moving forward, there are two key questions:

1. How to combine public and private providers effectively for meeting UHC goals in a manner that avoids perverse incentives, reduces provider induced demand, and that meets the key objectives specified above?

2. How to integrate different types and levels of services— public health and clinical; preventive and promotive interventions along with primary, secondary, and tertiary clinical care—so that continuum of care is assured? Inadequate prevention and inappropriate utilisation of secondary or tertiary care, when primary care should suffice, would result in much higher cost of care."

Answers are sought in the document by examining systems of other countries. Most of these are the ones with a combination of public and private provisioning of services with a public fund paying the bills--...... Missing from these are two that have demonstrated that public and community driven systems are possible, China in its previous avatar, and Brazil in the present which has successfully moved towards developing a universal public health service system for a large part of its people. Clearly, these are not considered relevant examples if it has already been decided that public-private partnerships are the way the system is to be developed. Ignoring them also means that the vision of a public system that is the main provider of health services is not under consideration. Researches across the world have shown that this is the system with the least cost, both in terms of financial requirements and minimising unnecessary diagnostic tests and treatments which add to side-effects. All experts are agreed on this, the only contestation is on the feasibility of operationalising universal health services in the public system.

In order to develop the system of universal health care for India, the Planning Commission set up a 'High Level Expert Group on Universal Health Coverage 2020' in 2011. It also set up two Steering Committees for developing the framework for the 12th Plan in 2012--one for general health and another for AYUSH (Ayurveda, Yoga and Naturopathy, Unani, Siddha, Sowa Rigpa and Homeopathy). Several health activists and civil society networks such as the Medico Friend Circle and Jan Swasthya Abhiyan were involved and consulted. But finally, when the draft of the chapter on health of the 12th plan was prepared, it provoked a strong dissent since it proposed a 'managed care model'. No public health expert will accept this in the present context since it implies adopting the dominant model in the US that is largely dependent on private insurance and private providers and is one with the least results in terms of health outcomes. It is also the most expensive, with even companies such as Ford Motors finding their employees' medical bills so hefty that they contributed to the recession that hit the global economy in the past decade. The Planning Commission had to then get the chapter rewritten to make its language more acceptable.

The 12th plan has announced the decision to move from the NRHM to a National Health Mission that will initiate a National Urban Health Mission along with the NRHM. The Plan outlay for 2013-14 of the Department of Health and Family Welfare is 29,165.00 crore rupees. Of this 20,999 crores is for the National Health Mission and the rest 8166 crore for all other heads, including  1,975.00 crore for the Pradhan Mantri Swasthya Suraksha Yojana (PMSSY), aimed at strengthening the tertiary sector, envisages setting up of new AIIMS-like institutions and upgradation of existing Government Medical College Institutions. Development of Human Resources in the health sector is being given an outlay of 1,151.65 crore. The National Programme for Prevention and Control of Cancer, Diabetes, Cardiovascular Diseases and Stroke (NPCDCS) gets Rs. 365.00 crore.

Thereby, there seems to be a greater focus on the urban, on the non-communicable and on tertiary services.  These are all required, but this additional focus must not be at the cost of the rural, the communicable diseases and the primary and secondary services. There is no separate bifurcation in the allocations for the rural and urban components, and there is the 12th plan statement about using the presence of the private sector in urban areas for the NUHM. The Steering Committee report for the 12th plan had also spoken of the need for contracting in the private providers, especially those who can provide integrated primary, secondary and tertiary services. Who other than the corporate sector can provide this range, other than the government? The 12th plan has also spoken of social insurance, and all recent experience of health insurance schemes, such as the RSBY, the Arogyashree and other such schemes, have shown a preponderance of private providers getting the funds. Therefore, there is a real danger of the budgetary allocations of public funds for health getting channeled to private services rather than really strengthening the public services for the underserved.

Apportioning Budget allocations across departments within the ministry

The total outlay on health services is distributed between the four departments of the Ministry of Health and Family Welfare as given in table 1:


Table 1

Health Department Allocations and Expenditure over XIth and XIIth Plans

(Amount in crore of Rs)


Departments  in the MOHFW

  XIth Plan Allocations

 XIth Plan Expenditure

XIIth Plan Allocation

% increase over XIth plan expenditure


Dept. of H & FW   

1,31,651 (90%)     

83,407 (93.11%)

2,68,551 (89.51%)



Dept. of AYUSH      

      3,988 (2.7%)  

2,994 (3.34%)





Dept. of Health Research 

      4,496 (3%)     

1,870 (2.09%)





National AIDS Control Org.



1,305 (1.46%)








89,576 (100%)

3,00,018 (100%)


   Figures in brackets = Percent of total allocation to Ministry

   Sources of Data: XIth and XIIth Plans, Planning Commission, Govt. of India


Thus almost 90 per cent is for the Department of Health & Family Welfare, 3.5% for AYUSH and Health Research and 3.8 per cent for AIDS Control. In the 2013-14 budget (see table 2), the allocations other than to the Department of Health and Family Welfare are further skewed in favour of AIDS Control, with 5.5 per cent being allocated to it. The budget 2013-14 also apportions much less for health research compared to what the 12th plan did. AYUSH gets more in both, almost double of what it got earlier, and this is a good trend, but it may not meet the requirements recommended by the Steering Committee on AYUSH for the Twelfth Plan that gave several recommendations for strengthening the AYUSH services in the country. The conceptual frame of the health system used by the Steering Committee on Health for the 12th Plan endorsed the significant role of AYUSH by positing it, together with health research, as the two cross-cutting disciplines that impact all dimensions of the health system. 

Table -2

Central Plan Outlay for Departments of Ministry of Health and Family Welfare

(In crores of Rupees)


Actuals 2011-2012

Budget 2012-2013

Revised 2012-2013

Budget 2013-2014

Department of Health and Family Welfare






Department of  AYUSH






Department of Health Research






Department of AIDS Control











Source: Union Budget 2013-14

What the budget allocations indicate is only the financial allocation which indicates the priorities set by the Planning Commission, but it does not necessarily tell the perspective with which various heads will actually be spent. If it is to be a people-centred health care and service delivery, then people's own agency must be respected and promoted. The knowledge base and its control are crucial in this respect. It is here that AYUSH, local health traditions (LHT) as folk practices, and self care are critical.

Unfortunately, none of the documents give any space to LHT, nor does the budget seem to do so. So will it mean that even under budgetary allocation of the department of AYUSH, more funds will only translate into more for promotion of pharmaceutical companies that are increasingly getting into herbal and AYUSH products? One major focus of the Department of AYUSH in recent years has been promotion of AYUSH products abroad. Will the increase in funds get channelised there, or will it even marginally go into promotion of folk practitioners and practices that empower people and that are the only form of non-commercial health care?

In Conclusion

Thus, while welcoming the increase in outlay for health in the 2013-14 budget, and within it the outlay for AYUSH, the concerns are two-fold: one, that the increase is inadequate for the task of moving towards universal health coverage, and two, that in the name of both universal coverage and promotion of AYUSH, public funds are likely to be channelised to private corporate providers and producers, covering the needs of the better-off and not those that are of high priority for improving the health of the poor and underserved, 



Planning Commission 2011: High Level Expert Group on Universal Health Coverage. Planning Commission, Government of India, New Delhi

Planning Commission 2012: Steering Committee on Health for the 12th Plan. Planning Commission, Government of India, New Delhi

Planning Commission 2012: Steering Committee on AYUSH for the 12th Plan. Planning Commission, Government of India, New Delhi

Planning Commission 2012: Twelfth five Year Plan (2012-2017). Government of India, New Delhi

Planning Commission 2013: Union Budget 2013-14; Expenditure Budget Vol. I, 2013-2014. Government of India, New Delhi

Savedoff WD, de Ferranti D, Smith AL, Fan V. Political and economic aspects of the transition to universal health coverage. www.thelancet.com Vol 380 September 8, 2012

World Bank: Health Expenditure, Public as % GDP. Available at data.worldbank.org/indicator/SH.XPD.PUBL.ZS

World Bank: Health Expenditure, Public as % of total Budget. Available at




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