India’s Union Budget has allocated significant resources to strengthen the country’s healthcare system. However, realizing the full potential of these investments hinges on numerous state-level factors. Many of these allocations are for Centrally Sponsored Schemes (CSS), where states not only contribute financially but also bear the responsibility of implementation. The effectiveness of these budget allocations heavily depends on the financial capacity and operational frameworks of individual states.
Two prominent CSS initiatives aimed at bolstering physical health infrastructure are the Pradhan Mantri Ayushman Bharat Health Infrastructure Mission (PM-ABHIM) and Human Resources for Health and Medical Education (HRHME). PM-ABHIM focuses on establishing health and wellness centers (AB-HWCs), developing block-level public health units (BPHUs), and creating integrated district public health laboratories (IDPHLs) and critical care hospital blocks (CCHBs) in each district. The goal is to enhance India’s preparedness for future health emergencies, such as pandemics. The HRHME initiative prioritizes scaling up medical personnel by establishing new medical, nursing, and paramedical colleges, and expanding existing institutions’ capacity. Another crucial aspect is strengthening and upgrading district hospitals and linking them to newly established medical colleges at the district level.
Despite these ambitious plans, concerning trends in fund utilization emerge. Estimates of central expenditure for these initiatives over the past three budgets reveal a lackluster performance in fund absorption. In PM-ABHIM, the ratio of ‘Actual’ expenditures to the ‘Budget Estimate’ of the CSS component reached only about 29% in 2022-23. While the ‘Revised Estimate’ for 2023-24 was approximately 50% of the Budget Estimate, the ‘Actuals’ are anticipated to be lower. Similarly, the HRHME program saw fund utilization at only around a quarter of the Budget estimates in both 2022-23 and 2023-24.
This low utilization has led to a reduction in budget allocations for both PM-ABHIM and HRHME in the full budget compared to the interim budget. Several factors contribute to this concerning trend.
In the AB-HWC component of PM-ABHIM, 60% of the funding was to be sourced from the health grants recommended by the 15th Finance Commission, as outlined in the scheme’s operational guidelines. However, a recent study by the National Institute of Public Finance and Policy reveals that only around 45% of these grants were utilized from 2021-22 to 2023-24. Discussions with state government officials highlight the complex execution structure of these grants as a major obstacle to their effective utilization.
Furthermore, the IDPHL component requires states to integrate public health laboratories across various vertical programs to prevent duplication. This necessitates extensive restructuring of existing implementation frameworks at the state level, demanding significant planning, streamlining, and coordinated efforts.
Additionally, nearly all components, including BPHUs and CCHBs, involve construction activities, which are often hindered by rigid procedures and delayed fund absorption. The overlap of funding from multiple sources for certain scheme components with similar activities adds another layer of complexity.
The HRHME program faces a different set of challenges, even if allocations for physical infrastructure were better utilized. A study by the Centre for Social and Economic Progress (CSEP) reveals a shortage of over 40% in teaching faculty positions across 11 of the 18 newly established All India Institutes of Medical Sciences in the country. The situation is even more alarming in state government medical colleges in Empowered Action Group States. In Uttar Pradesh, for instance, where 17 government medical colleges were established between 2019-21, 30% of teaching faculty positions were vacant in 2022.
This shortage of specialists could severely impact the task of setting up medical colleges or upgrading district hospitals to medical colleges. The challenge extends to CCHBs under PM-ABHIM, whose staffing norms include specialists. According to rural health statistics for 2021-22, over a third of sanctioned specialist positions in urban CHCs and two-thirds in rural CHCs were vacant as of March 2022.
Another crucial factor is the financial space available to states. State governments will be responsible for the recurring costs of maintaining the physical infrastructure created under PM-ABHIM and HRHME, necessitating additional financial commitments. The Union government’s support for human resources is limited to the duration of the PM-ABHIM scheme, ending in 2025-26. The capacity of states to plan and support recurring expenses beyond this period is crucial for the productivity of the incurred capital expenditure. States need to create sufficient fiscal space to support these initiatives while simultaneously contributing to other CSS and their own state health schemes.
In conclusion, transforming capital expenditure allocations into effective health outcomes requires addressing several critical factors. Firstly, states need to enhance their fiscal capacity to meet additional recurring expenditures. Secondly, addressing the underlying structural causes of human resource shortages is essential. Finally, improving public financial management processes for executing schemes and grants is crucial. These elements will play a pivotal role in ensuring that budgetary allocations for capital expenditures translate into tangible improvements in India’s healthcare system.
