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Small grant but a big opportunity for local bodies


In early November 2021, a potentially game-changing and transformative development went by, almost unnoticed — the release of almost Rs. 8,500 crores to 19 States, as a health grant to rural and urban local bodies (ULBs), by the Department of Expenditure, the Ministry of Finance.


GS-III: Indian Economy, GS-II: Governance (Government Policies and Initiatives)

Dimensions of the Article:

  1. About the Health grant for Local Bodies
  2. What were the previous experiences of government funding?
  3. Fifteenth Finance Commission’s Recommendations on Health
  4. Focus on Local Bodies
  5. Important steps to work with the grant
  6. Way Forward

About the Health grant for Local Bodies

  • The commission had recommended a total grant of Rs 4,27,911 crore to local governments including health grants of Rs 70,051 crore for the period from 2021-22 to 2025-26.
  • Of this amount, Rs 43,928 crore has been recommended for rural local bodies and Rs 26,123 crore for urban local bodies.
  • For FY 2021-22, Rs 13,192 crore has been allocated which would be 2.3% of the total health expenditure (both public and private spending together) and 5.7% of the annual government health expenditure (Union and State combined).
  • This grant is equal to 18.5% of the budget allocation of the Union Department of Health and Family Welfare for FY 2021-22.
  • It is around 55% of the second COVID-19 emergency response package announced in July 2021.
  • These grants are meant to strengthen healthcare systems and plug critical gaps at the primary healthcare level.
  • Interventions such as support for diagnostic infrastructure, block-level public health units, construction of buildings at sub centres, PHCs, CHCs will directly lead to strengthening the primary health infrastructure and facilities in both rural and urban areas.
  • Rural and urban local bodies can play a key role in the delivery of primary healthcare services and in achieving the objective of universal healthcare.

What were the previous experiences of government funding?

  • In 1992, as part of the 73rd and 74th Constitutional Amendments, the local bodies in the rural and urban areas given the responsibility to deliver primary care and public health services.
  • Alongside, the rural settings continued to receive funding for primary health-care facilities under the ongoing national programmes.
  • But, the government funding for urban primary health services was not channelled through the State Health Department and hence the ULBs which fall under different departments in various States did not increase the allocation for health.
  • Reasons – The reasons for lesser allocation can be attributed to
  • Resource crunch
  • Lack of clarity on responsibilities related to health services
  • Completely different spending priorities
  • In 2005, National Rural Health Mission (NRHM) was launched which partly improved the impact of RLBs not spending on health.
  • The National Urban Health Mission (NUHM) was launched eight years later with a meagre annual financial allocation which never crossed Rs 1,000 crore (around 3% of budgetary allocation for the NRHM)
  • In 2017-18, the ULBs and RLBs in India were contributing 1.3% and 1% of the annual total health expenditure in India.
  • In urban settings, most local bodies were spending from less than 1% to around 3% of their annual budget on health.

Fifteenth Finance Commission’s Recommendations on Health

  • States’ health spending should be boosted to more than 8% of their budgets by 2022, according to the XVFC.
  • Given the imbalance in medical practitioner availability between states, an All-India Medical and Health Service, as intended under Section 2A of the All-India Services Act, 1951, is required.
  • The entire grants-in-aid support to the health sector for the award period is 10.3% of the total grants-in-aid proposed by XVFC. The funding for the health sector will be provided on a no-strings-attached basis.
  • The XVFC has recommended health grants for urban health and wellness centres (HWCs), building-less sub centres, block level public health units, support for diagnostic infrastructure for primary healthcare activities, and the conversion of rural sub-centres and PHCs to HWCs. These funds will be distributed to local governments.

Focus on Local Bodies

  • The duty for delivering primary care and public health services was shifted to local bodies (LBs) in the rural (Panchayati raj institutions) and urban (corporations and councils) regions as part of the 73rd and 74th Constitutional Amendments in 1992. The expectation was that this would lead to more attention to and funding for healthcare in the geographic authority of local governments.
  • In addition, rural areas received support for primary healthcare institutions as part of continuing national programmes. However, the judgement was a setback, particularly for urban healthcare.

Government Measures:

  1. National Rural Health Mission (NRHM): The National Rural Health Mission (NRHM) was established in 2005 with the goal of providing rural populations, particularly vulnerable groups, with accessible, cheap, and high-quality healthcare. NRHM aims to offer rural residents, particularly disadvantaged populations, with equitable, inexpensive, and high-quality healthcare.
  2. National Urban Health Mission (NUHM): NUHM strives to enhance the health of the urban population in general, especially the poor and other marginalised groups, by ensuring equal access to high-quality healthcare.

Important steps to work with the grant

  1. First, the grant should be used to educate key stakeholders in local governments about their roles and responsibilities in primary care and public health service delivery.
  2. Second, Citizens’ understanding of local government’s duties in healthcare services should be increased. Such a strategy might serve as an empowering instrument for system accountability.
  3. Third, Civil society organisations could play a larger role in promoting awareness of the role of Local Bodies in health, as well as maybe building local dashboards to assess success on health programmes.
  4. Fourth, the health grants from the Fifteenth Finance Commission should not be used as a “replacement” for local government health expenditure; instead, local governments should boost their own health spending on a regular basis to have a real impact.
  5. Fifth, institutionalise systems for greater cooperation among different agencies working in rural and urban regions. It is necessary to build time-bound and coordinated action plans with quantitative indicators and road maps.
  6. Sixth, Local governments are still considered “healthy greenfield” places. Young administrators in charge of such Rural Local Bodies and Urban Local Bodies, as well as enthusiastic councillors and members of Panchayati raj institutions, must use this chance to establish novel health models.
  7. Seventh, A number of state governments and cities had planned to build various sorts of community clinics in rural and urban regions before the new coronavirus pandemic began. All of these initiatives should be revived with the funds.

Way Forward

  • India’s healthcare system needs additional government support.
  • When it comes to local governments, however, incremental financial allocations must be supplemented by elected officials demonstrating health leadership, multiple agencies coordinating with one another, increased citizen engagement in health, the establishment of accountability mechanisms, and the process must be guided by a multidisciplinary group of technical and health experts.
  • The health grant from the Fifteenth Finance Commission has the potential to develop a health ecosystem that can serve as a long-awaited springboard for mainstreaming health in rural and urban local government activity.
  • This is an opportunity that the Indian healthcare system cannot afford to forego.

-Source: The Hindu

July 2024