Budget allocation for health sector as percentage of GDP declining: Parliamentary Standing Committee

Budget allocation for the health sector as a percentage of GDP has been “constantly declining” since FY23. And keeping in mind inflationary pressures and population growth, outlays have to be increased for better coverage, a Parliamentary Committee has said.

Also, the Government Health Expenditure (GHE) – through various schemes and investments – targeted to be at 2.5 per cent by 2025 is still below the benchmark. Although it has increased from 1.35 per cent in 2017-18 to 1.84 per cent in 2021-22, further acceleration is required.

“The current pace of increase may not be sufficient to achieve this goal within the remaining time-frame,” the Committee said, adding “…given the inflationary pressures ….the allocation to the health sector, particularly the Department of Health and Family Welfare, should have been much higher.”

From 0.33 per cent of GDP (at current prices) in FY21, the Budget Estimate (BE) per cent of GDP declined to 0.30 per cent a year later in FY22. It saw a slight increase to 0.31 per cent in FY23, but again declined to 0.29 per cent in FY24 and further to 0.27 per cent in FY25.

“With inflation expected to remain high in the near term, the Department should consider for requesting higher budgetary allocations for the health sector at the Revised Estimate stage and ensure the optimal utilisation of allocated funds,” the report said.

The allocation saw a 10.83 per cent increase in BE for 2025-26 compared to the Revised Estimate (RE) for 2024-25. The ₹95,957.87 crore allocated to the Department of Health and Family Welfare for the current fiscal is about 1.89 per cent of the total Budget estimate.

falls short

“A review of past trends indicates that actual expenditure has often fallen short of the budgeted allocation, remaining at just 0.27 per cent of GDP in both 2022-23 and 2023-24,” the Standing Committee said in the report tabled this week.

“Furthermore, budgetary allocations have continuously fallen short of the Department’s projected Demands for Grants, averaging a meagre 0.3 per cent of GDP at current prices,” it said.

For FY26, the projected demand has increased to ₹100,702.79 crore; but factoring in the inflation rate of 5.2 per cent in December 2024, the population growth of the country and the National Health Policy’s goal of raising government health expenditure to 2.5 per cent of GDP by 2025, “the Committee believes that the Department of Health and Family Welfare must reassess its policy framework.”.

for higher allocation

“….recommends the Department to request the Ministry of Finance for higher allocation for enhancing healthcare infrastructure and healthcare services nationwide,” it said.

The Committee in its report has held that in the light of challenges faced during the Covid -19, there is a need to be “better prepared” for the post-Covid era and for any future pandemics.

Castigating the Health Department, it maintains that over the past five years, it has been observed that the demand projected “has been consistently low and has declined significantly compared to the 2021-22 levels”. F

In fact, since FY23, the Revised Estimates (Budget allocations) have “consistently been lower” than Budget Estimates.

“This undermines the credibility of the Department’s demand for higher fund allocations….. This raises concerns about the effective utilisation of allocated funds in real terms,” the report said.