Stingy Health Budget Disarms India’s Fight Against The Pandemic

As the Indian economy struggles to recover from the unprecedented devastation caused by the first wave of the pandemic, the second wave has hit the nation in a more debilitating manner. The country’s economy is expected to suffer again due to the lockdowns and restrictions imposed to contain the surging infections.

Almost every agency is predicting a loss of GDP, though estimates vary. The International Monetary Fund (IMF) estimated that India’s GDP will grow by 12.5% in 2021-22 due to a low base in the last fiscal. However, the RBI estimates suggest a much lower level of growth at 10.5%.

The Economic survey for the year 2020-21 presented along with this year’s budget peg the GDP growth rate at 11%. More recently the Moody’s has projected India’s GDP growth in 2021-22 at 9.3%.

The 2019-20 real GDP was Rs.145.7 lakh crore at 2011-12 prices. It fell to 134.1 lakh crore in 2020-21. Therefore, India has to at least grow by 8.7% to retain the level of GDP similar to the pre-pandemic year (2019-20).

This is possible only if India avoids prolonged lockdowns during the ongoing second wave and a severe third wave. It is possible only if India vaccinates at a much higher level and ramps up health infrastructure in a big way. Spending for this is financially prudent as it saves huge loss of national income besides averting humongous human suffering. 

Quite unfortunately this simple fiscal logic is missing in the central government’s budget. Despite a universal recommendation to augment health spending, the government of India has reduced allocations for the health sector in the first post-pandemic budget.

The center’s 2021-22 Budget has provided for Rs.71,269 crore for the Department of Health and family welfare. This included a budgeted capital expenditure of Rs.2,508.7 crore. In contrast, in 2020-21, the total health and family welfare (RE) was Rs.78,866 crore, implying a fall of Rs.7,597 crore in 2021-22.

In the budgeted capital expenditure for health also, there was a fall of Rs.1,724.8 crores as compared to the RE of 2020-21 at Rs.4,233.5 crores.

Even the allocations made for vaccines have hardly been spent. Despite a budget outlay of Rs.35,000 crores for vaccines, the centre till recently has spent a meagre Rs.4745 crores only.

Such a parsimonious approach to public financing of health expenditures deprives India of the ability to fight the pandemic causing huge erosion in the national income. 

By Prof K Nageshwar

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