The National Health Accounts data for 2013-14 present fresh evidence that India continues to have a non-serious approach to the provision of universal health coverage to all its citizens.
India’s health system is one of the most privatised in the world, poorly regulated and accessible only to those with income levels well above the average.
All these attributes are, once again, strongly borne out by the NHA data, which lay bare the extremely low government spending on health which, at 1.15 per cent of GDP, compares poorly with even Sub-Saharan Africa.
The share of State governments, which are largely responsible for provision of health care, in government health expenditure is estimated at 0.75 per cent of GDP.
Evidently, a health policy that fails to pool the financial risk of illness at the population level results in impoverishing payments made out of personal funds — and the NHA figures confirm that despite rising government revenues, the bulk of Indian health spending, a staggering 64.2 per cent of health expenditure, is met by households out-of-pocket.
That such OOP expenses declined by five percentage points over a decade is encouraging, but this is insignificant in comparison with the achievement in, say, Thailand, where 75 per cent of the population was brought under UHC in just one year.
Details :-
n 2013-14, the Total Healthcare Expenditure (THE) of India was Rs. 4.5 lakh crores, which amounts to 4 per cent of the Gross Domestic Product (GDP).
The Draft National Health Policy 2015 recognises this to be a problem. It says: “Global evidence on health spending shows that unless a country spends at least 5-6 per cent of its GDP on health and the major part of it is from government expenditure, basic health care needs are seldom met.”
Of the total amount of Rs. 4.5 lakh crores, Current Health Expenditure (CHE) constituted Rs. 4.2 lakh crores (93 per cent). Rs. 31.9 thousand crore (7 per cent) went to Capital Expenditure.
Key Findings:-
- Households continue to be the dominant contributors (73 per cent of CHE) to health finance in India. The bulk of the total money circulating in Indian healthcare – around 69 per cent – comes from Out Of Pocket (OOP) payment by households. OOP is the money which individuals pay out of their own.
- High OOP spending is a result of abysmally low government spending on health, constituting just 1.15 per cent of GDP and 30 per cent of CHE – the lowest among the BRICS nations.
- It has long been argued that government spending on health should increase to 2.5 per cent of GDP, a figure also envisaged by the Draft National Health Policy 2015.
- Around 45 per cent is spent on outpatient care (including both general and special treatment) as compared to 35 per cent in inpatient care.
- Overall, the current expenditure on curative care is estimated at Rs 3.4 lakh crores (80.4 per cent) whereas. In contrast, a meagre 9.6 per cent – is spent on preventive care.
- All the government-funded national health programmes such as the National Disease Control Programmes are covered under this category. However, it does not include spending on sanitation or providing access to clean drinking water.
Raising government expenditure on health, in conjunction with the States, should form the basis of policy change; the road map for this was proposed by the Planning Commission’s High Level Expert Group in 2011.
Remedial policies in two key areas can quickly scale up to reduce the OOP burden on households.
- One is to put in place a centralised system for procurement of essential drugs, relying mainly on quality generics and distributing them through the State government system.
- The other is to arrive at the cost of all medical procedures for different classes of hospitals, laying down standards and forming regulatory authorities at the State and district levels under law to enforce the rules.
It was estimated by the Planning Commission group, for instance, that spending 0.5 per cent of GDP (compared to 0.1 per cent spent by the public health system) could ensure the availability of essential medicines free of cost to all Indians.
Regulatory controls would automatically lead to a reduction in costs, and curbing of unethical and corrupt practices by hospitals and diagnostics centres.
It should then be easier to quickly extend free health insurance to more classes of people, such as senior citizens, children and the disabled, and achieve universal coverage early.
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Petrol in India is cheaper than in countries like Hong Kong, Germany and the UK but costlier than in China, Brazil, Japan, the US, Russia, Pakistan and Sri Lanka, a Bank of Baroda Economics Research report showed.
Rising fuel prices in India have led to considerable debate on which government, state or central, should be lowering their taxes to keep prices under control.
The rise in fuel prices is mainly due to the global price of crude oil (raw material for making petrol and diesel) going up. Further, a stronger dollar has added to the cost of crude oil.
Amongst comparable countries (per capita wise), prices in India are higher than those in Vietnam, Kenya, Ukraine, Bangladesh, Nepal, Pakistan, Sri Lanka, and Venezuela. Countries that are major oil producers have much lower prices.
In the report, the Philippines has a comparable petrol price but has a per capita income higher than India by over 50 per cent.
Countries which have a lower per capita income like Kenya, Bangladesh, Nepal, Pakistan, and Venezuela have much lower prices of petrol and hence are impacted less than India.
“Therefore there is still a strong case for the government to consider lowering the taxes on fuel to protect the interest of the people,” the report argued.
India is the world’s third-biggest oil consuming and importing nation. It imports 85 per cent of its oil needs and so prices retail fuel at import parity rates.
With the global surge in energy prices, the cost of producing petrol, diesel and other petroleum products also went up for oil companies in India.
They raised petrol and diesel prices by Rs 10 a litre in just over a fortnight beginning March 22 but hit a pause button soon after as the move faced criticism and the opposition parties asked the government to cut taxes instead.
India imports most of its oil from a group of countries called the ‘OPEC +’ (i.e, Iran, Iraq, Saudi Arabia, Venezuela, Kuwait, United Arab Emirates, Russia, etc), which produces 40% of the world’s crude oil.
As they have the power to dictate fuel supply and prices, their decision of limiting the global supply reduces supply in India, thus raising prices
The government charges about 167% tax (excise) on petrol and 129% on diesel as compared to US (20%), UK (62%), Italy and Germany (65%).
The abominable excise duty is 2/3rd of the cost, and the base price, dealer commission and freight form the rest.
Here is an approximate break-up (in Rs):
a)Base Price | 39 |
b)Freight | 0.34 |
c) Price Charged to Dealers = (a+b) | 39.34 |
d) Excise Duty | 40.17 |
e) Dealer Commission | 4.68 |
f) VAT | 25.35 |
g) Retail Selling Price | 109.54 |
Looked closely, much of the cost of petrol and diesel is due to higher tax rate by govt, specifically excise duty.
So the question is why government is not reducing the prices ?
India, being a developing country, it does require gigantic amount of funding for its infrastructure projects as well as welfare schemes.
However, we as a society is yet to be tax-compliant. Many people evade the direct tax and that’s the reason why govt’s hands are tied. Govt. needs the money to fund various programs and at the same time it is not generating enough revenue from direct taxes.
That’s the reason why, govt is bumping up its revenue through higher indirect taxes such as GST or excise duty as in the case of petrol and diesel.
Direct taxes are progressive as it taxes according to an individuals’ income however indirect tax such as excise duty or GST are regressive in the sense that the poorest of the poor and richest of the rich have to pay the same amount.
Does not matter, if you are an auto-driver or owner of a Mercedes, end of the day both pay the same price for petrol/diesel-that’s why it is regressive in nature.
But unlike direct tax where tax evasion is rampant, indirect tax can not be evaded due to their very nature and as long as huge no of Indians keep evading direct taxes, indirect tax such as excise duty will be difficult for the govt to reduce, because it may reduce the revenue and hamper may programs of the govt.