Union Budget: Government’s Focus on Privatising Healthcare?

In the Budget speech for the fiscal year 2020-2021, Finance Minister Nirmala Sitharaman said that an amount of Rs 69,000 crore has been allocated for health. The minister announced Centre’s plans to expand the government’s flagship health insurance scheme Ayushman Bharat-Pradhan Mantri Jan Aarogya Yojana (PMJAY). She also talked about the proposal for setting up hospitals in the Public Private Partnership (PPP) model, so that poorer people from tier-2 and tier-3 cities could be bought under this scheme.

In the expenditure budget for FY 2020-21, the Ministry of Health & Family Welfare is allocated Rs 67,111.80 crore, out of which Rs 65,011.80 crore are allocated to the Department of Health & Family Welfare and Rs 2,100 crore are allocated to the Department of Health Research. The allocation for the Department of Health and Family Welfare saw an increase of 3.75% from FY 2019-20. However, according to experts, this increase is not enough to achieve the government’s target of making healthcare expenditure 3.5% of the GDP by the year 2025.

The allocation for Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (AB - PMJAY) is Rs 6,400 crore in FY 2020-21, the same amount as FY 2019-20. However, a look at the budget document for the Department of Health & Family Welfare shows that the Centre only managed to spend half the allocated amount in 2019-20. According to the revised estimate for the year, the government spent Rs 3,200 crore on the scheme in the previous fiscal year. This raises questions as to why the government is unable to spend the money allocated to PM’s flagship scheme, and if it cannot spend the money, why is it allocating such a large amount—9.84% of the total amount allocated to the department—to the scheme?

FM Nirmala Sitharaman said in her budget speech, “It is proposed to set up Viability Gap funding window for setting up hospitals in the PPP model. In the first phase, those Aspirational Districts will be covered, where presently there are no Ayushman empanelled hospitals. This would also provide large scale employment opportunities to youth. Proceeds from taxes on medical devices would be used to support this vital health infrastructure.” However, the state governments of Madhya Pradesh and Chhattisgarh have already opposed the government’s proposal of privatising district hospitals.

The allocation for the National Health Mission (NHM), which consists of the National Rural Health Mission (NRHM) and National Urban Health Mission (NUHM), saw an increase of 1.3%, from Rs 32,995 crore in 2019-20 to Rs 33,400 crore in 2020-21. The budget allocation for NRHM and NUHM remained the same as the previous year. However, the allocation for NRHM, Rs 27,039 crore, is a decline of 2.85% from the revised estimate for 2019-2020. The total allocation for NHM also saw a decline of 1.15% from the revised estimate for the previous year.

The Department of Health & Family Welfare also saw a decrease in allocation funds for the statutory and regulatory bodies like Food Safety and Standards Authority of India, Indian Pharmacopoeia Commission, Medical Council of India, National Academy of Medical Sciences. The allocation for these bodies saw a decrease of 21.96% from the year 2019-2020, at Rs 308.81 crore.

The fund allocation for autonomous bodies like All India Institute of Medical Science, Post Graduate Institute of Medical Education and Research also saw a decline of 5.84% from the previous year. The decline is even starker when compared to the revised estimate for 2019-2020, at 7.04%.

From Nirmala Sitharaman’s Budget speech, and from the budget document itself, it is clear that the government is more focused on expanding the AB-PMJAY scheme to privatise primary and secondary healthcare for the benefits of the corporates, while the increase in allocation for the National Health Mission, which, according to Economic Survey of the year 2019-20, should make up at least two-thirds of the total allocation for health, continues to remain negligible.