Expenditure by the Health and Family Welfare Ministry rose to almost Rs 13,000 crore in April this year, three times the expenditure of Rs 4,327 crore incurred in the same month last year amid the coronavirus (Covid-19) outbreak.
Experts say a large part of the expenditure in April was spent on heads such as creating infrastructure for testing capacity and procuring testing kits among other things.
In fact, the ministry incurred 19 per cent of its allocated expenditure for the entire 2020-21 in April itself compared to 7 per cent a year ago and 3 per cent in 2018-19. At this rate, the allocation would be entirely exhausted in a little over five months.
Former health secretary K Chandramouli said, “All expenditure is linked to policy objectives. During Covid-19, there is higher expenditure related to labs, protective gear that has to be taken up, while also carrying on other programmes of the health ministry such as controlling diseases such as TB etc.”
Apart from the heads cited above, a large part of the expenditure in April was incurred on procuring personal protective equipment and other medical gear, clinical trials, and hiring of experts to strategise and build understanding of the novel coronavirus.
In fact, the Department of Health and Research, under the ministry, spent almost half of its allocated Rs 2,100 crore in April itself compared to 19 per cent in the same month last year.
The data for May is not out, but over the last two months the Indian Council of Medical Research (ICMR) has issued several tenders, including the recent expression of interest for transfer of technology for the development of Covid-19 antibody detection and ELISA kits for screening human serum samples.
The ICMR has also been conducting and approving various clinical trials for Covid-19 and other medical treatments. On May 30, the research body also invited expressions of interest (EoI) for personal accident insurance cover with Covid-19 extension for its permanent and contractual staffand consultants across India.
As of May, the country has also ordered 2.13 million combined diagonstic test kits for reverse transcription–polymerase chain reaction (real time RT–PCR), one of the most accurate laboratory methods for detecting, tracking and studying Covid-19.
The Ministry of Ayush has a small budget of around Rs 2,100 crore for the current financial year. Of this, 13 per cent was spent in April itself, against 3 per cent a year ago.
If one combines the budget allocation for the health ministry and the ministry of Ayush for the current financial year, the amount comes to 0.3 per cent of the GDP (assuming it remains at the level of 2019-20).
However, if health expenditures through other ministries and departments are also combined, the entire sum comes to about 1.5 per cent of GDP, according to experts. This should be raised to 3 per cent, according to them.
As the country spends more on health, it would need to find ways to save somewhere else to be fiscally prudent.
The chief economist of CARE Ratings, Madan Sabnavis, said going forward, the government will have to spend more on health, on the revenue side, buying medicines, inducting more people as doctors and nurses.
He said that cutting back on expenditure was challenging. “You cannot cut on MNREGA or PM Kisan. May be you can touch some peripheral things such as some segments of education, like giving free books and all, but that is not much,” he said
Aditi Nayar, principal economist at ICRA, said in light of the expected revenue shortfall and higher demand for expenditure on items such as health, the government is attempting to compress other revenue spending. “If this does not create adequate fiscal space, then it might have to resort to deferring capital expenditure or raising borrowing further,” she said.
Most of the expenditure on health is on the revenue side. For instance, 98 per cent of the money allocation for 2020-21 is pegged on the revenue side, that does not create assets such as hospitals.
The government has already planned to borrow Rs 4.2 trillion more than budgeted amount of Rs 7.8 trillion as its expenditure to fight the impact of Covid-19 rises and revenues fall due to the lockdown.
The Centre’s fiscal deficit has already hit 35 per cent of the budgeted amount for FY21 in the first month itself against 22 per cent a year ago.
The finance ministry has kept on hold the implementation of all new schemes other than those announced in the Rs 20-trillion package.
New schemes, up to Rs 500 crore, which have already been appraised by the departments and ministries, would also be suspended in the current financial year, stated a memorandum issued by the expenditure department. These schemes would also include those which have been given an in-principle approval.
Earlier, the government had announced curbs on spending in the first quarter in April. First-quarter spending by most ministries and departments was restricted to 15-20 per cent. A freeze was also announced on the hike in dearness allowance for government employees.