That National Health Policy 2017 says that government spending on health must reach 2.5% of GDP by 2025. In order to achieve the target, spending would have to grow from the 2016-17 level by nearly 20% year on year. But this year’s Central Government budget actually has seen a decline in outlay.
As per this year’s Economic Survey total government spending on health- which includes expenditure on health, family welfare and water & sanitation – by the Centre and states was Rs 2.3 lakh crore. At that level, it was 1.4% of GDP.
The GDP of 2016-17 is estimated to be Rs 152.5 lakh crore. If we assume a nominal GDP growth of 12% per annum (say, 7% actual growth plus 5% inflation) from 2016-17 to 2025-26, then the GDP would rise to Rs 423 lakh crore by that year. If 2.5% of that GDP is allocated to health, the combined health budget of Centre and states should be 10.6 lakh crore.
To reach this level of allocation, the combined spending on health should grow by about 19%. If GDP growth is faster than the assumed 12%, health expenditure too will have to grow faster, i.e allocation will have to be even higher, to keep pace with it.
WHO data shows that there are only about 30 countries, mostly in sub-Saharan Africa and India’s neighborhood that allocate less than India does as a percentage of the GDP. Most developed countries like France, the US, UK and Canada spend about 8% or more of their GDP on health, while Germany spends about 9.5%. Among the BRICS countries, China at 3.2% was closest to India’s levels, the rest being significantly higher.
