Status of Public Health Spending in India

  • National Target (NHP 2017): Raise public health spending to 2.5% of GDP by 2025.
  • Union Government Share: Target of 1% of GDP (40% of total public spending) – actual 0.29% of GDP (2025‑26).
  • Trend Post‑COVID: Union health spending fell from 0.37% of GDP (2020‑21) to 0.29% (2025‑26).
  • State vs Centre: States increased from 0.67% (2017‑18) to 1.1% of GDP (2025‑26), while the Centre’s share declined, indicating financial hyper‑centralisation.
  • Health Transfers: Union’s share of transfers for Centrally Sponsored Schemes dropped from 75.9% (2014‑15) to 43% (2024‑25).
  • Health & Education Cess (HEC): Only 25% of HEC collections were allocated to health in 2023‑24; the rest substituted core health budget.
  • Global Disparity: Per‑capita public health spending is among the world’s lowest – 2.5× lower than Bhutan, 3× lower than Sri Lanka, and 10‑15× lower than BRICS, Thailand, Malaysia.

National Health Policy (NHP) 2017 – Key Highlights

  • Objective: Achieve Universal Health Coverage (UHC) through free primary care, affordable secondary/tertiary care, and reduced out‑of‑pocket (OOP) expenditure.
  • Core Principles (10): Equity, Affordability, Universality, Patient‑Centred Care, Quality, Accountability, etc.
  • Quantitative Targets:
  • Increase government health expenditure to 2.5% of GDP by 2025.
  • State health spending > 8% of state budgets.
  • Reduce MMR to 100 (by 2020) and U5MR to 23 (by 2025).
  • Cut premature NCD mortality by 25% by 2025.
  • Policy Thrusts:
  • Health‑in‑All‑Policies approach.
  • Expansion of Health & Wellness Centres for comprehensive primary care.
  • Strengthening human resources, infrastructure, and HMIS.
  • Strategic private‑sector engagement via purchasing and regulation.

Reasons for Low Public Health Spending

  • Political Economy of Visible Infrastructure: Roads, bridges, and cash transfers yield immediate electoral gains, unlike long‑term health investments.
  • Fragmented Financing Architecture: No ring‑fenced health pool; health budget competes annually with other sectors.
  • Weak ‘Health‑in‑All‑Policies’ Implementation: Key determinants (sanitation, nutrition, air quality) are managed by separate ministries with separate budgets.
  • Dominance of Private Healthcare Narrative: Perception of health as a private consumer good reduces public demand for state funding.
  • Absence of Legally Binding Roadmaps: Targets remain aspirational without enforceable, time‑bound implementation plans.

Steps Necessary to Increase Public Health Spending

  • Enhance Fiscal Capacity:
  • Reform tax structure, broaden base, improve digital compliance, rationalise GST.
  • Introduce a health cess or higher GST on harmful goods (e.g., 35%) earmarked for health.
  • Accelerate Finance Commission Grants: Deploy 15th FC health grants for PHCs, CHCs, and infrastructure.
  • Leverage Blended Finance: Combine public, philanthropic, and private capital as per NITI Aayog’s 2022 report.
  • Strengthen PM‑JAY: Subsidise premiums for the “missing middle” and cover indirect costs.
  • Improve Efficiency & Accountability: Outcome‑based budgeting, direct benefit transfers, transparent health accounts.
  • Legal & Policy Reforms: Enact a Right to Health Act and consider moving public health to the Concurrent List for stronger national standards.

Conclusion

India’s chronic under‑investment in public health reflects a gap between the ambitious NHP 2017 roadmap and actual fiscal implementation. Without a concerted push to raise Union spending, improve fiscal federalism, and embed legal safeguards, goals such as UHC, reduced OOP expenditure, and equitable healthcare will remain elusive.

UPSC Relevance

  • Prelims: Factual data on health‑spending percentages, targets, and comparative international figures.
  • Mains: Analytical questions on fiscal federalism, health‑in‑all‑policies, and legal reforms needed to achieve UHC.
  • Essay/Policy Analysis: Critically assess financing trends and propose institutional, fiscal, and legal measures.