The Covid-19 pandemic struck the world, including India, by surprise last year. The treatment protocol for the unknown disease was unknown. Most countries lacked masks, personal protective equipment (PPE) kits, and diagnostic kits, as well as hospital beds, oxygen units, and ventilators, which would serve as the first line of defence.
A year later, as India faced its second wave of infections, the world’s most serious in terms of daily cases to date, the supply shortages only grew worse. All appeared to be in short supply, from research kits to hospital beds, oxygen to ventilators, medications to ambulances.
Was India unprepared for the disaster? Examining government spending on health from 2019-20 to 2021-22 (for both the Union and the states) is a good way to address this issue.
The health-care spending of the Union government.
Despite the fact that the fiscal year 2020-21 has come to a close, we still do not have the final figures on government spending. Provisional spending figures from the Controller General of Accounts (CGA), which is part of the Ministry of Finance, are what we have so far.
The headline figures are underwhelming. The ministry of health and family welfare invested 64257.8 crore in 2019-20. The 2020-21 budget projections (BE), which were introduced before the pandemic reached India, only increased this amount by 4.4 percent. According to the updated projections (RE) provided with the 2021-22 Budget, health expenditure in 2020-21 will be increased to 82,928.3 crore.
If the CGA figures are to be believed, 2,234.4 crore, or around 3% of the revised estimate, will go unused. The ministry of health’s overall allocation in 2021-22 (BE) is lower than in 2020-21 (RE).
Spending on health care by state governments
Health spending data for 24 states is available in the Centre for Monitoring Indian Economy (CMIE) database from 2019-20 to 2021-22. Unlike the federal government, there is no equivalent of the CGA that keeps track of state government spending.
These states spent Rs.1.34 lakh crore on health in 2019-20. (medical and public health under social services). According to budget projections, this was projected to rise to 1.64 lakh crore in 2020-21. According to the updated estimates reported in 2021-22, this figure was revised to 1.69 lakh crore. In2021-22, these 24 states are projected to spend 1.9 lakh crore on health.
Only when the final figures are released in 2021-22 can we know how much money will be spent in 2020-21. When it comes to taxes and capital investment, states outspend the Union.
Health-related capital expenditures
The trend in the Union government’s capital spending on health, which will include the construction of new health facilities, is telling. In 2019-20, it was a pitiful 1666.9 lakh. It was reduced to 1065.7 crore in the 2020-21 BE numbers, but it was revised upwards to 4233.5 crore in the 2020-21 RE numbers. According to preliminary estimates from the CGA, only 3586.99 crore (or 85 percent of the RE) had been invested by March.
The 98 percent utilisation of tax spending, which accounted for 96 percent of the ministry’s total expenditure, drives 97 percent of the ministry’s total expenditure. Recurring costs, such as paying wages, are covered by revenue spending. The capital spending figure for 2021-22 BE is smaller than both the RE and preliminary projections for 2021.
The capital spending on health in the 24 states for which data is available is higher than the national average. In 2019-20, they invested Rs 12256.7 crore. The BE number for this head in 2020-21 was 20787.2 crore. However, in the 2020-21 RE figures, this was reduced to 20177.4 crore. Owing to the economic turmoil caused by the pandemic, many analysts believe that states have been forced to cut back on capital investment. These states’ capital expenditure health in 2021-22 is estimated to be 29872.7 crore.
The overall increase in capital expenditure on health after the pandemic hit India is abysmally poor when read with the shortfall of 600 in states’ capital spending as per 2020-21 BE and RE figures. It’s no surprise that India’s health system is on the verge of collapsing as the second wave sweeps the country.
Not everyone is to blame for the low health-care spending. In2021-22, some states spent a higher percentage of their budget on health than others. According to the RE estimates for2021-22, Delhi spent 12.4 percent of its budget on health, more than five percentage points higher than Assam, the next largest state that spent the most on health. The Union government, on the other hand, allocated 2.4 percent of its budget to the Ministry of Health.
Telangana is the only state among the 24 for which CMIE data is available that spent less than this amount, at 2.39 percent. Twelve states invested more than 5% of their spending on health. Another nine states spent between 4% and 5% of their budget on health.
