Low public spend on healthcare may pose challenges to fight Covid-19

Although the total budgetary allocation for healthcare has increased only marginally during the past five fiscals, the total per-capita spending on healthcare has almost doubled from Rs 1,008 in 2014-15 to Rs 1,944 in 2019-20, clipping at a CAGR of 14 per cent, says a study.

During this period, the central and the states allocation on healthcare was 1.03 per cent (Rs 1.3 lakh crore ) in 2014-15 which rose to 1.29 per of the GDP (Rs 2.6 lakh crore) in FY20, wherein the states spent 75 per cent of the total in FY20, show the data collated by Care Ratings.

Of this, per-capita spending on healthcare has increased from Rs 1,016 in 2014-15 to Rs 1,962 in 2019-20, while per-capita capital spending has doubled from Rs 92 per person to Rs 181 per person in the same period, which still remains the lowest among the BRICS peers and OCED nations, which top the per-capita and budgetary spends on health.

The report assumes importance given the fast spreading of the virus and India's preparedness to face the pandemic, as even those nations with better infrastructure have seen huge number of deaths.

According to the OECD (Organisation for Economic Cooperation and Development) data, the country's total healthcare spending (private and public) stood at a low 3.6 per cent of GDP in 2016 (latest available) which is very low compared to other countries.

The average for OECD countries in 2018 was 8.8 per cent of GDP while developed countries like the US (16.9 per cent), Germany (11.2 per cent), France (11.2 per cent) and Japan (10.9 per cent) spend more than 10 per cent of GDP on healthcare.

Even the BRICS nations have higher proportion than India with the highest in Brazil (9.2 per cent) followed by South Africa (8.1 per cent), Russia (5.3 per cent) and China (5 per cent). Only Indonesia has a lower share than India at 3.1 per cent.

According to the OECD data, in 2016 India's per-capita healthcare spending was USD 209 as against OECD average of USD 3,994. In the US, it stood at USD 10,586, Germany (USD 5,986), France (USD 4,965) and Japan (USD 4,766) per person.

Total expenditure on healthcare has seen a sustained increase from 1.03 per cent in 2014-15 to 1.29 per cent in 2019-20. In absolute terms, it was a CAGR of 15 per cent from Rs 1.3 lakh crore in 2014-15 to Rs 2.6 lakh crore in 2019-20, of the total spending, revenue expenditure accounts for almost 90 per cent.

This share has marginally declined from 90.9 per cent in FY15 to 90.8 per cent in FY20 after peaking at 91.7 per cent in FY18. The share of capital expenditure has increased from 8.9 per cent in FY15 to 9.1 per cent in FY20 after peaking at 9.15 per cent in FY19, show the Care Ratings data.

Revenue expenditure of the Centre includes establishment expenditure, spending on various healthcare programmes, gross budgetary support to various medical institutions and transfers to the states under various central schemes such as the National Health Mission, Ayushman Bharat, among others.

Revenue expenditure includes expenditure on salaries and hence has increased while capital expenditure is for fixed structure and facilities and has not seen a commensurate increase.

Both revenue expenditure and capex on healthcare have seen a gradual pick-up during this period with revenue expenditure rising from 0.94 per cent in FY15 to 1.17 per cent in FY20 while capital expenditure rising from 0.09 per cent to 0.19 per cent.

Total expenditure incurred on healthcare--as percentage of total budgetary outlay of both the Centre and the states) has increased from 3.5 per cent in FY15 to 3.9 per cent in FY20.