Government to increase fund allocation for health to 2.5% of GDP

NEW DELHI: The government has decided to increase health expenditure to 2.5% of GDP by the end of the 12th Plan, from 1.4%. The decision taken at a high-level meeting chaired by Prime Minister Manmohan Singh comes in the wake of increased evidence that private expenditure on health far outstrips public expenditure.

Though India's performance in achieving the millennium development goals in health has improved, it is still below desired levels. The low level of public funding is seen as the reason. To rectify the situation, it was decided that the Planning Commission would make the required allocation for the sector to achieve the target.

Since health is a state subject, it would need to get states on board to make higher allocations. To this end, it was suggested that the Planning Commission may motivate and incentivize states to allocate more funds for the health sector.

An appropriate mechanism would be required for this, which would be developed in consultation with the health ministry.

The prime minister emphasised the need for increased outlay to health sector during 12th Plan. He said, "though funds for the health sector will not be a constraint, there is a need to create adequate capacity at the Centre and the states to meaningfully absorb the increased outlay."

With the health ministry working towards its goal of universal health care, it was also decided that the ministry may set up a central procurement agency early for providing 'free medicine for all through public health facilities' under the National Rural Health Mission (NRHM) and prepare Standard Treatment Protocols early. The Cabinet has already approved the setting up of the procurement agency.

The meeting specifically focused on implementation of recommendations of the National Commission for Macroeconomics & Health and the High Level Expert Group on Health.