States hike in healthcare expenditure to help meet India's '2.5% of GDP' target

India’s expenditure on health, including clean water and sanitation, is set to achieve the target of 2.5% of GDP by 2024-205 even as the centre’s allocation failed to reach 0.8% of GDP. As states managed to push healthcare expenditure to 1.58% of GDP last year, the combined effort of states and Centre added up to 2.13% of GDP.

Public healthcare expenditure includes allocation of health and family welfare, Ayush, research and water supply and sanitation. By this calculation, the centre's expenditure was only 0.58% of GDP and 48% of this was spent on water and sanitation. Allocation for family welfare has gone down to 0.26% of GDP lower than the 2018-19 budget where the centre spent 0.28% of GDP.



The figures are a cause of concern as the allocation for family welfare is used for funding national programmes and maintaining public health systems. Experts say that spending on clean water does keep one healthy, but is not a substitute for spending on public health systems. Remove the spending on water and sanitation and one will find that the expenditure on healthcare has been on a steady decline whether looked at as percentage of government’s total expenditure or percentage of GDP.

National Health Policy in 2017 had recommended that the government spends 2.5% of GDP on healthcare by 2025.A National Health Mission in 2018 also gave a presentation on the roadmap to achieve the target in seven years. The expenditure at that time was 1.4% of GDP.

As per plans to touch 2.5% of GDP by 2025, central allocation for health from 2018-19 to 2023-24 fell short by 1.5 lakh crore, while the combined spending by states was 3.6 lakh crore more than planned.

From 1.25% of GDP, the allocation of states went up to 1.58 by 2023-24. As a share, total expenditure of states on healthcare has gone up from 7.5% in 2018-19 to 8.8% in 2023-24, more than the target of 8% given by the National Health Policy 2017. This increase in allocation might help achieve the 2.5% of GDP target 2025.


However, in the past year, states have also decreased their expenditure on the health system from 75.3% in 2018-19 to a little under 70% in 2023-24. The overall spending remains high due to the allocation to water and sanitation.

There is a difference in spending among states too. States like Uttar Pradesh, Odisha, Bihar, Jharkhand and Haryana spend well over the target of 8%, while states like Kerala, Tamil Nadu and Karnataka spend lesser than the target.