Budget and (un)ease of living when it comes to health

Richa and Indranil | Updated on February 15, 2020

Cuts in healthcare spending and emphasis on privatisation are cause for concern

At a time when the Indian economy is going through prolonged stagflation with historically high levels of unemployment and a slump in rural consumption, among other things, it was expected that Budget 2020 would provide the necessary impetus to boost the economy and bolster public spending on health and nutrition.

Defying all expectations, the Budget, instead, cut public spending on health, something that would directly impact people’s access to healthcare.

Although Budget allocations for the Ministry of Health and Family Welfare and Ministry of AYUSH increased marginally in nominal terms, from ₹66,466 crore in 2019-20 to ₹69,234 crore in 2020-21, the additional ₹2,768 crore does not compensate for the rise in prices.

So, in real terms, allocations have gone down by 4.3 per cent. And as a result, the Centre’s share of GDP on health has gone down from 0.33 per cent to 0.31 per cent (see graph).

The flagship National Health Mission (NHM), credited to have saved lives of millions of mothers and children, has also received a cut of ₹390 crore in this year’s Budget. Adjusted for inflation, this means a 7 per cent decline in allocations.

Over the years, there is a systematic weakening of NHM with continuous cuts in spending. Thus, its share in the total health budget of the Centre has come down from about 61 per cent in 2014-15 to 48 per cent in 2020-21 (Budget Estimates).

Allocations towards Health and Wellness Centres (HWCs), a key component of the Ayushman Bharat programme, meant to make primary care more comprehensive, continue to stagnate at last year’s level of ₹1,600 crore. This essentially means there would be very little expansion of the much-needed programme. The issues of maternal and child health continue to be neglected as allocations for the Reproductive and Child Health (RCH) component under NHM have declined and the allocations for Pradhan Mantri Matru Vandana Yojana (PMMVY) have stagnated.

With cuts in allocations for NHM, we risk losing the gains achieved over the last decade. As evident from the 75th round of NSSO data on health, more people are moving towards public systems, both in rural and urban areas, owing to financial constraints.

Allocations to the Pradhan Mantri Jan Arogya Yojana (PMJAY), the public-funded health insurance scheme, have been retained despite huge under-utilisation of funds, owing to low levels of uptake of the scheme. Furthermore, in order to incentivise private sector investments in tier-2 and tier-3 cities, a viability gap funding has been proposed in the Budget.


There is a growing body of evidence that such insurance schemes, while ineffective in providing free care, fail to reduce catastrophic health expenditure. These schemes are also associated with inappropriate and unnecessary care and the pattern of claims is more reflective of provider preferences rather than people’s needs. When insurance is scaled up in a context where there is a huge inadequacy and inequity in access, with little regulation in terms of price and quality, it would result largely in transfer of public funds into private hands without any matching health outcomes or financial protection.

More than mere numbers

Budgetary allocations towards health are not mere numbers. The lives of people depend on public provisioning of healthcare. Any cut in health budget means further weakening of an already resource-constrained public system and putting lives of most vulnerable sections of the society, the poor, children, mothers and elderly, at the risk of delayed care or untimely and avoidable deaths.

The Centre’s latest cuts in healthcare spending and emphasis on privatisation of healthcare would only increase the unease of living for people, making the goal of affordable and equitable access to health and healthcare unattainable.

(Richa works with People’s Health Movement and Indranil is an Associate Professor at OP Jindal Global University and associated with PHM. Views are personal)

Published on February 15, 2020

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