Government orders a cut in healthcare budget - India Today

Picture for representational purpose. Photo: Reuters Government has ordered a cut of nearly 20 per cent in its 2014-2015 healthcare budget due to fiscal strains.

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.

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

The move reflects the government's struggle to achieve its 2014-2015 fiscal deficit target of 4.1 percent of GDP.

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.

According to reports, a Health Ministry official 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.

The retrenchment could also derail an ambitious universal healthcare programme that Modi wants to launch in April. The plan aims to provide all citizens with free drugs and diagnostic treatments, as well as insurance benefits.

In addition to the healthcare budget, the Finance Ministry also ordered a spending cut for India's HIV/AIDS programme by about 30 per cent to 13 billion rupees.

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