India’s Health Policy: A long tale of underachievement – Prakash Gupta

This is a guest post by PRAKASH GUPTA


Health has been the most neglected policy domain in India.The fact that India made it first National policy on Health in 1983, 36 years after independence itself reflects the level of priority for the state. India’s health policy, health financing in particular, suffers from ‘shifting goal posts’ phenomenon.

It is quite evident from unsuccessful benchmarking and ambitious (unrealistic at times) commitments in the earlier versions of the health policy. In this perspective, National Health Policy (NHP) 2017 fails to offer substantial pathways to achieve the ambitious number of “2.5% of GDP” even by 2025.

The National Health Policy 2017 sets the benchmark for health expenditure by increasing it from current level of 1.15% of GDP to 2.5% of GDP by 2025 (to be achieved by 2020 in anearlier draft). However, the Indian government has committed similar levels of benchmarking for health expenditure and infrastructure in the previous policy documents as well. An analysis of the previous policy documents gives following insights:

  1. Community Development Programme, 1951-1955

Commitment: One Primary Health Center (PHC) per one lakh population

Status of Achievement: One PHC per 5.5 Lakh population in 2010

  1. Alma Ata Declaration, 1978 and First National Health Policy, 1983

Commitment:One PHC per 20,000- 30,000 population and one Sub-PHC per 3000- 5000 population by 2000-01

Achievement: In 2000-01, shortage of 1875 PHCs and 10992 Sub-PHCs.

  1. Second National Health Policy, 2002

Commitment:Government spending to be increased from 0.9% to 1.2% of GDP by 2010. Also, to increase state sector spending from 5.5% to 7% of budget by 2005 and to 8% of budget by 2010

Status: Government spending was 1.09% of GDP in 2010 and state sector spending was 6.41% of the budget in 2010. Now, NHP 2017 targets to increase it to more than 8% by 2020

  1. Universal Health Coverage Report, 2010

Commitment: Increase Health care spending from 1.2% (2001-02) to 2.5% by the end of 12th five year plan (2017) and 3% by 2022

Status: Current status of healthcare spending is 1.15% of GDP. Now, NHP 2017 targets to increase government spending to 2.5% by 2025.

Also, the erstwhile UPA government promised to increase it from 0.9% (in 2004-05) to 2-3% of GDP by 2012. The first National Health Policy of 1983 mentioned ‘Health for all by 2000’. NHP 2017 mentions “Progressively achieve Universal Health Coverage” without giving substantial pathway and timeline to it.

India’s health expenditure is one of the lowest among all the nations and much lower than the suggested norm of 5% of GDP. One of the constraints in financing is that health is a ‘state subject’.

The contribution of central government to the overall expenditure is still one-third of the total expenditure. The central government intervenes through centrally sponsored schemes which are being implemented through state budget or through state’s implementing agencies (such as Panchayati Raj Institutions).

Role of states and associated issues in Health Expenditure

As a state subject, it was envisioned that the states will make necessary health services available to meet the health needs of the people. To do this, central government specified that the states should make a certain number of Sub-Primary Health Centers (Sub-PHCs), Primary Health Centers (PHCs) and Community Health Centers (CHCs) to meet the health needs of the people. However, states governments were unable to arrange the prescribed infrastructure. National Rural Health Mission (2005) was started to meet this gap, initiated with the modest expenditure of approximately 0.2% of GDP. As of now, more than half of the total central government’s contribution is channelized through NRHM. Since 2005, there has been a steady increase in health spending but not as much as it was estimated through various policies. The capacity of the states to utilize the increased amount of funding was also quite critical in achieving the level of commitment from central government. On the flip side, the funds allocated by the central government were meant for providing additional support to the state but the concerns were raised that it may act as a substitute for the existing state funding. In 2009, then Minister of Health, expressed it by saying “What I see is that the state governments think that the government of India is giving money, why should we bother?”In addition to it, there has not been a specified pattern in the level of health expenditure per capita of the central government across states with varying levels of health outcomes.

Though central government is increasing the expenditure on health but the rate of increase has been slower in last few budgets, particularly after 2012-13. Union budget 2017 was an important exception that nominally increased it by 23%. The major question is how much sustainable will this increase be to meet the revised benchmarking of 2.5% of GDP and how much of this will supplement by the states’ contribution?

A World Bank studynoted that the elasticity of government spending to GDP, for health expenditure from 1990-2007 was 0.87. This implies that the state governments were spending 0.87% for every 1% rise in GDP, lesser than the rate of increase in the GDP. Internationally, it has been noticed that higher economic growth is associated with thehigher share of public resources for health. India has seen tremendous economic growth but this has not been translated into greater health expenditure. The same study mentioned the capacity of states to spend the increased amount as one of the constraints in increasing health expenditure.

NHP 2017 doesn’t make mention that states need to coordinate in order to achieve 2.5% of GDP.

Universal Health Care

National Health policy 1983 mentioned the goal of attaining “Health for All by 2000 AD”. The objective of Universal Health Care (UHC) is providing access to quality healthcare, when needed, without creating afinancial hardship. Universal Health Care is explicitly a policy objective in many countries. “Access” to healthcare is critical in achieving Universal Health Care, an insufficient number of human resource in addition to aninadequate number of PHCs and CHCs makes it a far-reaching goal. In 2013, there was a shortfall of 17% in the number PHCs 29% in the number of CHCs. This shortfall varies across the states. Bihar, for example, had shortfall of 91% in CHCs and 39% in PHCs in 2013. The shortfall is equally high for the specialist doctors in the existing health facilities. The absenteeism of the present staff in these facilities is another issue.

Unfortunately, the health policy doesn’t provide enough solutions to these problems. NHP 2017 mentions “Progressively achieve Universal Health Coverage” without giving substantial pathway and timeline to it. NHP advocates collaboration with non-governmental on apro-bono basis for service delivery linked to health card. NHP doesn’t seem to place this solution as a supplement to the infrastructure and facilities in the public hospitals for the time being but prescribes it as a solution to solve the problem of “accessibility and affordability”, thereby ignoring the problematic issues involved in collaborating with the sector that is largely unregulated. By expecting that the private players will provide the sufficient amount of healthcare services to the underserved areas, thegovernment is likely to take a leeway from its responsibility to provide sufficient infrastructure in public healthcare facilities.

Even if thegovernment successfully increases the health expenditure, the government may deviate the funding towards not-for-profit or for-profit entities through “strategic purchases” of health services.NHP 2017 mentions that “the main mechanism of strategic purchasing are insurance and through trusts.” The policy also envisions to have “strategic purchases” for secondary and tertiary health care and collaborate with theprivate sector in urban areas for delivering better primary health care.

The government funded insurance schemes like RashtriyaSwasthyaBimaYojna (RSBY) has its own policy issues. It will definitely give some relief from the current state of out-of-pocket expenditure but this policy doesn’t offset the standard market failures of adverse selection and moral hazard. The associated market failures coupled with targeting errors of awarding Below Poverty (BPL) status will pose serious constraints in achieving Universal Health Coverage. “Building strategy with not for profit” won’t help much in offsetting these failures. Health insurance schemes may give additional fuel to the gigantic private sector that may even grow into a powerful lobby that can develop a strong hold on the health policy in the coming decades which may hamper further development of government-funded health infrastructure. By not providing any substantial pathway for the development of public health infrastructure, NHP has given the indication that the subsidized private health insurance is likely to expand in coming decades.

Corporate Social Responsibility for health infrastructure

NHP 2017 in section 13.3 mentions that “CSR is an important area which should be leveraged for filing health infrastructure in public health across the country.” NHP’s focus on CSR as a supplement to the fiscal space doesn’t have great fruits to offer. The recent analysis of CSR spent of top 100 National Stock Exchange (NSE) listed firms shows a much-skewed distribution across the country. The richer states are receiving more proportion of CSR expenditure. For example, Maharashtra alone received 13% of total CSR spent in 2014-15.The study noticed that “CSR spent is concentrated in developed states with a strong manufacturing presence such as Maharashtra, Karnataka, Tamil Nadu, Gujarat, Andhra Pradesh and Rajasthan”. Also, most of the CSR activities doesn’t contribute much to the infrastructural development.

Health Care spending and failure to reprioritize

The continuous failure to increase the heath care spending demonstrates the state’s failure to reprioritize health in the development agenda. NHP 2017 also took a step back on giving the legal framework to the normative responsibility of the government of ensuring health facilities to all the citizens. The legal framework has an important role in prioritizing health and makes various units of the political system (including states and central government) accountable for their commitments. In 2000, Brazil passed a constitutional amendment that required an increase in 5% spending, states and municipalities were also obliged designate 12% and 15% of their revenues to provide health care. The result was the share of spending increased from 4% in 2000 to 9% in 2011.

The silencein thenewsrooms and newspapers on the abysmal state of health has contributed to the failure of reprioritization. Even NHP 2017 is missing from most of the television debates and have not been able to gather big newspaper headlines. One needs to drag down to the OP-ED or editorial pages to get the picture on thedismal state of health. Despite a high rate of out-of-pocket expenditure, health services have seldom become an issue in any state elections.

However, some areas of health are getting some attention from the government. Keeping aside the debatable technicalities on its implementation, Swachh Bharat Mission (SBM) is worth to mentionas an important initiative the area of Water and Sanitation which is likely to reduce disease burden in the coming years.  Considering that 99% of the health needs are funded domestically, 1.5 Billion USD loan for Swacch Bharat Mission (SBM) from the World Bank is a ‘big push’.

[Prakash Gupta completed his post-graduation in Development Studies from IIT Guwahati and is presently a Research Associate at IIM Ahmedabad.]

6 thoughts on “India’s Health Policy: A long tale of underachievement – Prakash Gupta”

    1. Actually, over-achievement in spelling isn’t a bad thing. JNU to Hindutva fans is like Krishna to Kamsa. Worshipping it with hatred.


  1. It would be great to see more examples of best practices like that of Brazil to understand how this issue can be tackled. Great summary otherwise.


  2. The problem will be more in the coming decades unless all state governments learn something from delhi which allocates 45% budget to health.

    The problem lies in the Indian medical education system.The establishment of private colleges and the obsession of becoming doctors exists in the society.More than 200 colleges in private sector has been established in last decades.These colleges run for money.

    Creating All India health services is the most important step in tackling the dirtiest policies and corrupt governments swallowing the funds.

    There is no proper infrastructure in phcs and further there are thousands of positions vacant in healthcare sector which the government rarely bothers to full.

    Indian healthcare needs critical care treatment as it lies on ventilator in


  3. Delhi government under AAP has made a start in establishing mohala clinics ‘ with a view to provide basic health services. The central government may try to expand such basic health clinics and set up the clinics in many parts of the country. At least, the government is not following the regressive health care policies of Trump who is intent on slashing Obama’ s rarest better policy on health services – Obamacare !


  4. Very good summary of Govt of Indias policy on health and all the criticisms levelled against the state are well founded.Conceptually the new policy may be appealing.But how are they going to be implemented is the crucial question we have to pose at periodical intervals.


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