Kerala - Thiruvananthapuram   

State urged to innovate in health spending

Thiruvananthapuram: Even though the Central government’s spending on health has been going up in recent years, the inherent weaknesses or failures of the State health systems have resulted in these funds not being utilised in an effective manner, according to Peter Berman, Lead Economist (Health, Nutrition and Population), World Bank. He was delivering a lecture on ‘Health Financing in India: a new era,’ as part of the on-going national conference on Emerging Issues in Public Health here on Sunday. The health expenditure of many States, including Kerala, was consistently below the budget allocation for health since 1993 and these States had failed to deliver even basic health system components such as drug purchase or hiring adequate personnel.

Pumping more money into the health sector would not improve services or be effective unless States came up with innovative strategies for utilising health allocations, Mr. Berman pointed out. Increased health allocations from the Centre were being used up by States for recurrent expenditure such as salaries or renovation of buildings, he added.

The Government of India’s (GoI) health expenditure from 1999-2000 till 2004-05 had been dropping even below 1 per cent of the Gross Domestic Product (GDP). For example, in 2001-02, the total health spending in the country was about Rs.108,732 crore, which was about 4.7 per cent of the GDP. But of this, the government’s share was less than 30 per cent, while household expenditure accounted for nearly 70 per cent of the total spending, Mr. Berman said.

But the picture had been changing in the past two to three years and in 2006-07, the government’s (both Centre and State) health expenditure had climbed to around 1.13 per cent of the GDP.

With the implementation of the National Rural Health Mission, significant increase in health spending by GoI was expected in the 11th Plan. The NRHM annual growth rate was projected at 40 per cent and the States’ annual growth rate at 20 per cent over the 11th Plan. This would mean that the total government spending on health would go up to about 1.67 per cent of the GDP over the 11th Plan.

“India has a long way to go before it can hope to attain its goal of health expenditure of 2 to 3 per cent of the GDP because there are significant constraints to government financing,” Mr. Berman said.

One of the main constraints would certainly be whether the government could keep pace with the requirements in the health sector and develop the capacity to find innovative ways of spending money.

The sustainability of funding programmes was yet another factor, as a very large share of the Central funds under NRHM was currently being used by the States for recurrent costs such as paying salaries for doctors hired on contract. In effect, the increased Central allocation was being used as substitute funds by States.

Finding means to increase the effectiveness of spending was another challenge.

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