Unkind cut: Govt forgets election promise, slashes healthcare spend 20% on funds strain

The government has ordered a cut of nearly 20 percent in its 2014/15 healthcare budget due to fiscal strains, putting at risk key disease control initiatives in a country whose public spending on health is already among the lowest in the world.

Two health ministry officials told Reuters on Tuesday that more than Rs 6000 crore, or $948 million, has been slashed from their budget allocation of around $5 billion for the financial year ending on March 31.

Despite rapid economic growth over the past two decades, successive governments have kept a tight rein on healthcare expenditure. India spends about 1 percent of its gross domestic product (GDP) on public health, compared to 3 percent in China and 8.3 percent in the United States.

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But hopes were high that Prime Minister Narendra Modi, who was elected in May, would upgrade basic health infrastructure and make medical services more affordable for the poor.

The United Nations estimates about one third of the world’s 1.2 billion poorest people live in India.

“We were not expecting (budget cuts) this time because of the commitments they made in the manifesto,” one of the health ministry officials said, referring to Modi’s Bharatiya Janata Party (BJP). “No reason was given … but there is shortage of funds. It is not rocket science.”

The officials requested anonymity because of the sensitivity of the matter.

The finance ministry, which ordered the spending reduction and overruled objections from the health ministry at a recent meeting, did not respond immediately to requests for comment.

The move reflects the government’s struggle to achieve its 2014/15 fiscal deficit target of 4.1 percent of GDP.

Dominated by private players, India’s healthcare industry is growing at an annual clip of around 15 percent, but public spending has remained low and resulted in a dilapidated network of government hospitals and clinics, especially in rural areas.

One of the health ministry officials said the cut could crimp efforts to control the spread of diseases. More newborns die in India than in poorer neighbours such as Bangladesh, and preventable illnesses such as diarrhoea kill more than a million children every year.

Reuters