Focus areas

The Union government must focus on health and education post-budget. Governance gaps in these two sectors risk breaking the state’s social contract with Indian citizens. The National Health Policy of 2017 set a target for government spending on healthcare—2.5% of gross domestic product (GDP) by both the Centre and states—to be achieved by 2025. But the budgetary outlay for healthcare has been range-bound between 1.2% and 1.4% in the period 2014-20. Thereafter, the Covid pandemic saw it rising to 1.8% in 2020-21, and 2.1% for 2021-22; preliminary indicators suggest that healthcare expenditure is likely to be 1.3-1.4% of GDP in 2022-23.
Low government spending on a vital part of the social sector has led to major flaws in this industry’s structure, leading to governance gaps. According to public health research organization Center for Disease Dynamics and Economic Policy, India had 69,265 hospitals in 2019, which translates roughly to one hospital for every 20,350 Indians. This leaves a wide chasm between demand and supply of healthcare capacity. The problem gets compounded by the fact that there are only 25,778 public hospitals against 43,487 private ones. Given that a large number of Indians reside in rural and semi-rural areas, it is clear that the number of public hospitals is inadequate. Worse, over 80% of India’s population is not covered by health insurance, forcing patients to pay for expensive treatment from their own pockets. But the government, which has a duty to provide affordable healthcare to citizens, has ceded this space and responsibility to private hospitals. This is not to say that private hospitals should not exist; they should be available to those who can afford them.
Education is another sector where both the Centre and states share responsibility. Again, regulation in the sector has focused largely on higher education and elementary and secondary school stages. Regulation for the two other stages—pre-primary and tertiary (10+2) levels—is largely a grey area, leading to multiple unethical practices. The combined Centre-state expenditure on education, as per Economic Survey 2021-22, has remained at 2.8% of GDP through 2014-20. Subsequently, in the wake of the pandemic, the bill increased to 3.1% for both 2020-21 and 2021-22. The expenditure ratio between the Centre and states works out to 23:77. In the current financial year, the combined spend is likely to end up between 2.8% and 3.1% of GDP. This is a far cry from the 6% of GDP promised in the 1968 education policy, which was re-affirmed in the 1986 policy and its 1992 review, and was further revalidated as a worthwhile target in the 2020 National Education Policy. Interestingly, a 2022 study by the ministry of education found that close to 61% of the Centre’s spending is focused on elementary and secondary education.
Regulating the healthcare and education sectors is not easy, since it entails close coordination with states and their various institutions. But a start has to be made and any time during the next 12-16 months seems like a good time to initiate some changes.