Where is health in the stimulus package?

Where is health in the stimulus package?

By, A.K. Shiva Kumar is a Delhi-based development economist

Introduction

India has done well to limit the COVID-19 score and flatten the curve. Credit for containing the spread of the virus should go to our frontline medical and health workers in government who literally rushed in where angels fear to tread to save people’s lives.

Putting aside threats to personal safety, family interests, and stigma, selfless government health workers across the country are the ones who are leading the charge.

Even before COVID-19, India was staring at a serious economic slowdown. India's GDP growth for 2019-20 was lowered to 4.1% from 5% projected by several agencies before the outbreak of the virus.

Recent reports predict that the impact of COVID-19 might reduce GDP growth rate to 1.1% or even lower in the current financial year.

Unemployment has been growing since January 2020 when the first cases of coronavirus emerged. According to the Centre for Monitoring Indian Economy(CMIE), India’s unemployment rate at the end of May 16, 2020 was staggeringly high at around 24%.

Due to our fragile healthcare delivery system, one wonders, whether Bihar can handle the consequences if the virus begins to spread with the return of millions of migrant workers back to the State.

A part of the relief funding must be used to seize the opportunity and invest in universal health coverage.

Restoring livelihoods

The Government have been focusing on ending the lockdown, reviving economic activities, restoring livelihoods, addressing concerns of hunger and starvation, stimulating small and medium enterprises, and enhancing farm incomes.

The package of ?20-lakh crore, equivalent to about 10% of India’s GDP, announced by the Prime Minister on May 12, is expected to restore the livelihoods of millions of migrants and other workers who have lost their jobs and also enable entrepreneurs and businesses to get re-started.

Economic desperation might leave poor workers with no choice but to return to work (Against A.23-forced labour). But many of them are truly worried about getting infected. Businesses are also genuinely concerned about the collapse of demand and shutting down of retail outlets.

Due to the unpredictability of government’s actions and policy revisions. This could well be a reason why, according to recent reports, in the midst of the long-term structural shift from China, companies prefer to relocate manufacturing to countries in the Association of Southeast Asian Nations (ASEAN) region, and not India.

In all this, the silence around health is disturbing.

Strengthening public health

Dealing with the COVID-19 pandemic has brought out the critical importance of the public sector in health provisioning. However, stuck at around 1.15% of GDP for well over a decade, the low level of public spending on health is both a cause and an exacerbating factor accounting for the poor quality, limited reach and insufficient public provisioning of healthcare.

The Union and State governments seem to have found the financial resources to provide an emergency response to deal with the pandemic.

The orders have been placed for PPEs, ventilators, testing kits, and other supplies needed to detect and treat COVID-19 patients.

It is possible that resources allocated for other health programmes are being diverted to deal with the COVID-19 pandemic.

The opportunity cost of such diversion of funds could be high.

Media reports point out, for instance, that people’s access to routine maternal and child health as well as family planning services in parts of the country has been negatively impacted.

Private health sector’s resistance

Also, many States are simply not in a position to deal with a second wave of infections. The pandemic has exposed a hard truth: most private healthcare providers seem to be incapable of and unwilling to help even during a national crisis.

And India’s private sector in health is sizable.

According to recent figures, the private sector accounts for 93% of all hospitals, 64% of all hospital beds, and 80-85% of all doctors.

Rapidly declining revenues and sharply eroding profits are leading to the closure of many private hospitals. Only a few private providers have come forward to extend support to the government.

Not addressing weaknesses in the public health delivery system can thwart all efforts at reviving the economy.

Seize the opportunity-Way Ahead

This is the time then to seize the opportunity and invest in universal health coverage (UHC) by reversing the financial neglect of public healthcare.

Nearly every country in the world that has achieved anything like UHC has done it through the public assurance of primary healthcare.

Announcing a new ‘health investment plan’ (as part of the stimulus package) is the urgent need of the hour.

At least 1% of GDP out of the stimulus package should be earmarked for improving the country’s health infrastructure and strengthening public health service delivery.

And up to 70% of the additional expenditures should be ring-fenced for primary healthcare and further strengthening health and wellness centres, primary health centres and community health centres.

Only then can State governments be better prepared to face a second round of the pandemic. Investing in health, apart from improving people’s well-being, is also essential for accelerating and sustaining India’s economic growth.