How Much Does the Government Invest in Our Healthcare?

Most G-20 Nations Allocate 10 Times More on Public Health

Newsreel Asia Insight #196
April 19, 2024

Amid a severe healthcare crisis triggered by COVID-19, the financial commitment of the government to healthcare seems to be dwindling, according to a report which evaluates the central government’s performance over the last 10 years. It points out that the allocation to the Ministry of Health and Family Welfare has decreased from 2.16% of the total government expenditure in 2019-20 to 1.9% in 2024-25.

When observed over a longer span, since 2013-14, the share of the health sector in the total budget outlay was slightly higher at 2.05%, according to the report by the Financial Accountability Network – India.

Given below is a summary of the report.

For the fiscal year 2024-25, the budget for healthcare, including the Department of Health Research, is pegged at 0.27% of the projected Gross Domestic Product (GDP), a drop from the 0.3% allocated in the previous year. Despite the National Health Policy of 2017 recommending a healthcare budget of 2.5% of the GDP by 2025, current figures are significantly lower than this target.

Internationally, India’s healthcare spending is notably less compared to other G-20 nations, except for Indonesia. Among these, most countries allocate at least 10 times more per capita on public health. Furthermore, among 55 low-middle income countries, India ranks as the 10th lowest in terms of public health expenditure as a percentage of GDP.

Since 2018, the budget allocations to the Ministry of AYUSH – which develops and promotes traditional and alternative medicine systems, including Ayurveda, Yoga, Unani, Siddha and Homeopathy – have nearly doubled, growing from 16.26 billion rupees in 2018 to 37.12 billion rupees, despite the funds being underutilised.

Hospitalisation rates have decreased across nearly every state and all social groups, with the most significant drops observed among poorer communities and Scheduled Tribes in rural areas. The decline in out-of-pocket spending, as claimed by the government, primarily results from this reduced healthcare use rather than enhanced financial protection. 

Data from the National Family Health Survey (NFHS) reveals that 50% of households typically avoid public healthcare facilities, with the highest avoidance seen in Bihar (80%) and Uttar Pradesh (75%). The primary reasons cited for not using government health services include poor quality of care (48%) and long waiting times (46%). Additionally, 40% of households reported the absence of nearby government facilities as a barrier.

Tragic incidents in Gorakhpur and Nanded in 2017 and 2023 respectively, where 35 people died within 38 hours at a tertiary care hospital allegedly due to the shortage of oxygen and medicine supply, reflect the dire state of health infrastructure.

Further NFHS data indicates significant barriers to healthcare for women, including distance, lack of transportation and the unavailability of female health providers. The COVID-19 pandemic starkly highlighted the deficiencies in India’s health system, including shortages in physical facilities, healthcare workers, medications and overall capacity.

Rural Health Statistics from 2018-19 to 2020-21 show a reduction in auxiliary nurse midwives (ANM)/female health workers, with a significant vacancy and shortfall in rural Primary Health Centers (PHCs). Despite increases in the number of specialists, a high percentage of doctor positions remain vacant.

Child health indicators are also alarming, with high rates of stunting, underweight conditions and anaemia among children, particularly in rural areas. The prevalence of anaemia increased between 2015-16 and 2019-21, with notable spikes in specific regions like Gujarat.

Despite these challenges, the budget for the Pradhan Mantri Jan Arogya Yojana (PMJAY) has seen steady increases. Yet, with 330 million cardholders and 65 million beneficiaries, the number of empanelled hospitals remains insufficient.

Furthermore, NFHS 5 reveals that 60% of women in India face difficulties accessing affordable health services due to inadequate infrastructure and a shortage of healthcare workers. The responses from an RTI inquiry highlight that fewer than 12% of hospitalised COVID-19 patients received free treatment under PMJAY.