India’s Government Health Expenditure as the Ratio to GDP

The appropriateness of the criterion that pegs the ratio of public health expenditure to the gross domestic product—which is volatile—needs a re-examination. The targets for allocation and expenditure of financial resources for health need to be based on indicators that can be monitored.

The views expressed in this article are those of the authors and not the organisations to which they are affiliated. The authors thank the various reviewers for their useful comments and suggestions towards improving this article.

COVID-19 has put the nation’s focus squarely on India’s healthcare system. India’s diverse and mixed healthcare system is burdened with the issues of quality, accountability, access, equity, affordability, and provision of services to its citizens. The COVID-19 pandemic has exposed these challenges highlighting an underfunded and inadequate public health system and a lack of accountability of the mostly unregulated private sector. One of the main reasons for the poor condition of public health system is due to a long history of underfunding by the central and state governments. The existing healthcare system and its infrastructure has not been able to adequately and efficiently respond to the COVID-19 pandemic.

Historically, budgetary allocations for health have always fallen short of requirements. The proportion of revenue expenditure on health in the total revenue expenditure of the government remained below 4% between the 1960s and the 1980s, which even declined to below 3% in the early 1990s (Duggal et al 1995). The share of the government health expenditure (GHE) in the total government expenditure (TGE) was below 3% in the early 2000s, which marginally increased to above 3% in 2005–06 (Berman and Ahuja 2008). Since then the GHE has hovered around 4.4% of the TGE (MOHFW 2019a). The ratio of health expenditure to the gross domestic product (GDP) for the country was below 1% between 1975–76 and 2003–04 (Rao et al 2005) and since then it has been remained between 1.1% and 1.3% of the GDP (MOHFW 2019b).