An article written by Victoria Fan, Anit Mukherjee and Rifaiyat Mahbub in the Global Health Policy Blob talks about Prime Minister Narendra Modi ‘s “Swasth Bharat”, a Healthy India. That combined with the proposed restructuring of the Planning Commission and the report of the 14th Finance Commission expected by the end of the year—the policy reforms under the ruling National Democratic Alliance (NDA)’s mandate of “Universal Health Assurance for All” have the potential to be a game-changer for India’s neglected public health system, according to them .
(Small error here : Swasth Bharat was a health magazine programme launched on World Health Day by Ghulam Nabi Azad, Union Health & Family Welfare Minister in 2012. Prime Minister Modi started the “Swachh Bharat Abhiyan”, which aims to be India’s biggest cleanliness drive.)
Moving on, they talk about India’s health system problems with only 1.7 percent of its GDP being spent on health expenditures and $15 per person for health each year. One critical policy lever according to them, that could have an impact on Indian public health expenditure and its effects on health outcomes is the financial flows and incentives from central government to states.
India’s center-to-state fiscal transfers have occurred through three channels—Finance Commission; Planning Commission; and Centrally Sponsored Schemes.While health is a ‘state’ subject, the central government has exerted significant influence on health financing through the flagship scheme known as the National Rural Health Mission (NRHM) which has now been extended to cover urban areas under the National Health Mission (NHM) umbrella.
However, a systematic assessment of the impact of the three channels of transfers at the state level has not been attempted until now.Over the past year, the Center for Global Development and the Center for Policy Research’s Accountability Initiative (in Delhi) have conducted research on intergovernmental fiscal transfers to improve health in India. They commissioned a background paper : Fiscal Federalism and Intergovernmental Transfers for Financing Health in India that analyzes the channels and mechanisms of center-to-state fiscal transfers that could affect health outcomes.
India’s system of intergovernmental fiscal transfer is complex and fragmented, characterized by multiple institutions and modes of delivery. The total intergovernmental fiscal transfers are estimated to be around 14 per cent of GDP. Direct expenditure by Central government through ministries for large Centrally Sponsored Schemes in health, education, energy, water and sanitation, agriculture, rural employment and other sectors is estimated to be around 2.5 per cent of GDP, which is part of the Planning Commission transfers. Public expenditure on health constitutes 1.1 per cent of GDP or about $16 per capita per year. There is considerable variation among states –poorer states with high population and disease burden spend only half of the more advanced states.
Moreover, in spite of equalization grants from the Finance Commission, there is increased dependence on fiscal transfers from the Center vis-à-vis increase in health expenditure in poorer states. The intergovernmental fiscal transfer system therefore needs to (i) augment the resource base of less developed states, (ii) incentivize them to prioritize expenditure on health, (iii) increase the equalization component of Finance Commission transfers to reduce the gap in per capita health expenditure and finally, (iv) improve the efficiency of resource utilization especially for funds from Union ministry of health for the NHM.
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