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Budget 2018: No real ease of living for Indians

Improved rural infrastructure, particularly sanitation, housing, roads and the showstopper of this budget: health insurance, are the key focus. A new promise is being slowly constructed

opinion Updated: Feb 01, 2018 19:10 IST
Budget 2018,Finance Minister,NDA
The focus on health care in this budget is indeed very welcome. For the last three years, the NDA’s health policy has been floundering and in need of urgent attention.

That rural India was to be the focus of budget 2018 was expected indeed needed, urgently. To this end, the FM’s budget speech made all the right noises. What is interesting, however, is the narrative of rural development that the government has constructed in this budget. Gone is the focus on jobs, skills, aspirations and empowerment. The budget speech shifted the narrative. The rural economy is to be strengthened through greater government welfare intervention. Improved rural infrastructure, particularly sanitation, housing, roads and the showstopper of this budget — health insurance — are the key focus. Achievements against these schemes are likely to frame the political message that the NDA is going to take to the people in 2019. Important here is a clear admission that the primary political promise of this government – better jobs for an aspirational India – has failed. There is a new promise that is being slowly constructed.

Equally significant, is what the FM did not speak about in his budget speech. Given the emphasis on the rural economy, the obvious thing for the government to do to alleviate immediate stress would have been to increase public investment in rural infrastructure. In his speech, the FM clearly said that spending more on rural infrastructure is a priority. However, the budget for the Ministry of Rural Development got a mere 4% increase in allocation. Importantly, both Swachh Bharat, the Pradhan Mantri Gram Sadak Yojana (PMGSY) – the rural roads programme and the Pradhan Mantri Awas Yojana (PMAY) – the rural housing programme, saw no real change in allocation. In fact, allocations for Swachh Bharat and PMAY have fallen by 9% compared to revised estimates of the previous year. For the last three years, the finance minister has specifically mentioned the Mahatma Gandhi National Rural Employment Guarantee Act( MGNREGA), going so far as to claim that the government had made the highest ever allocations to the scheme last year. It didn’t find place in the 2018 budget and, importantly, the scheme received no changes in allocation. The MGNREGA has received an allocation of Rs 55,000 crore this year which is the same as last year’s revised estimates, despite a backlog of pending payments. These low allocations need to be considered in light of the fact that construction targets are high. The government will construct, according to the FM’s speech, 1.88 crore toilets and 51 lakh new rural houses this year. In the absence of increased allocations, this seems no more than an empty promise and more important, the immediate concern of alleviating rural distress remains unaddressed.

And now to this budget’s showstopper – the National Health Protection Scheme to cover 10 crore poor and vulnerable families with a coverage of upto Rs 5 lakh per family. This, according to the FM, will be the world’s largest government-funded health care programme. The focus on health care in this budget is very welcome. For the last three years, the NDA’s health policy has been floundering and in need of urgent attention. But I fear that this current approach runs the risk of creating the world’s largest, unregulated public private partnership with limited impact on health outcomes.

Health insurance schemes are not new to India. The government of India has been running the Rashtriya Swasthya Bima Yojana (RSBY) since 2008 and many state governments have their own insurance programmes. Evaluations of these schemes have been few and far between but the limited available evidence seems to suggest that the effects on health outcomes are unclear and, perhaps more crucially, they haven’t done much to reduce out-of-pocket expenditure. There is some evidence to suggest that this may have risen. An important reason for these limited gains is that the three key preconditions of a successful insurance programme have not been met. First, access and awareness. Despite a relatively long run, RSBY enrolments are low. According to latest government data, RSBY targeted an enrolment of 5.9 crore families but only enrolled 3.6 crore. Studies suggest that lack of awareness and poor targeting is an important reason for this. How the government will scale up from 3.6 crore to 10 crore, is an open question.

Second, and more crucially, any attempt at improving tertiary health care will only be successful if its foundation — primary health care — is strong. This is necessary both to prevent minor illnesses from reaching hospitals and to ensure efficient referral for those who genuinely need hospital care. It is no secret that our primary health system is in a shambles and critical issues of doctor absenteeism and poor quality care remain unaddressed. Given this, any major investment in tertiary care is unlikely to yield results.

Finally, to assume that a low-capability state such as ours can perform a task as complex as regulating private health care — which includes addressing pricing and quality control, especially when existing legislation like the Clinical Establishments Act is weak — is a recipe for disaster. The first step to improving health care is reforms in primary care and in particular getting doctors to work. Health insurance programmes that are not embedded in a health systems reform effort are unlikely to achieve this.

So, in the final analysis what can be said of this budget? An important political statement, but one that is unlikely to improve the ease of living for Indians. What this means for election 2019, only time will tell.

Yamini Aiyar is president and chief executive, Centre for Policy Research

The views expressed are personal

First Published: Feb 01, 2018 18:24 IST