NHM helped increase central govt's spending on healthcare: CSEP-CPR study

This report has been updated

The National Health Mission (NHM) helped increase spending on healthcare by the central government compared to its total expenditure, according to a working paper released by the Centre for Social and Economic Progress (CSEP) and the Centre for Policy Research (CPR).

Researchers state that the NHM has had a distinct impact on health spending in its initial phase. “From 2000-01 to 2004-05, the rate of central health expenditure grew more slowly compared to total expenditure (centre plus states), a trend that reversed after the launch of NHM,” the paper states.

The launch of the NHM was accompanied by an increasing role played by the central government in health financing, evident from the fact that Union health expenditure per capita in the initial years of the NHM grew at a faster rate annually compared to the overall expenditure.

“The union government’s health spending per capita grew by 12.4 per cent annually between 2005-06 (the year of the launch of NHM) and 2019-20, compared with its overall spending, which grew by 10.3 per cent,” the study states.

Researchers add that this was largely due to the launch and subsequent expansion of spending on NHM in the first eight years.

The growth of health expenditures per capita relative to total expenditure then slowed down during 2010-11 to 2014-15 but still significantly outperformed overall expenditure in the next five years.

“Between 2015-16 and 2019-20, the union government’s health spending per capita grew by 13 per cent annually, compared to 7.5 per cent growth in the government’s total expenditure,” the study added.

The study also adds that NHM has helped reverse the declining trend of spending on health by states by providing them with non-wage resources in the context of their own low revenues.

To build a deeper understanding of fiscal federal dynamics in health financing effectively, six states with different health trajectories were identified for the study. These included non-high focus states under NHM such as Tamil Nadu, West Bengal, and Haryana, and high focus states Rajasthan, Meghalaya, and Madhya Pradesh.

“After the scheme’s launch in 2005, the average annual health expenditure of six sample states increased at a faster rate of 17 per cent compared to total expenditure, which grew by 15 per cent between 2005-06 and 2013-14,” the paper stated.

“The share of health in total expenditures of the states rose from 3.04 per cent in 2004-05 to 5.3 per cent in 2020-21,” the study added.