Note ban effect: Govt to spend more on health, education

Increase of 10% to 12% likely in a bid to improve citizens' mood after demonetisation, report Veena Mani and Arup Roychoudhury.

As part of a post-demonetisation gift, the government could increase spending for the coming financial year in health, education, women & child development and related social sector schemes by 10% to 12%, Business Standard has learnt.

This would run concurrently with the increased layout on social sector by state governments, after the 14th Finance Commission recommended the latter spend more on schemes in health, education and similar segments.

Most of these areas are state subjects.

The Finance Commission had increased the devolution of taxes to states from the divisible pool, from 32% to 42%. However, it had reduced non-tax transfers.

In its report, the Y V Reddy-headed commission had said, 'We urge state governments to use the additional fiscal space provided by us in the tax devolution to meet such requirements.'

After it accepted the recommendations, the Centre had slightly reduced some of its budgeted spending in social sector schemes for 2015-2016 and 2016-2017.

That is set to reverse.

Budget makers believe proceeds from the latest voluntary disclosure scheme, income tax raids and whatever dividends the Reserve Bank of India can pass on will enable that extra spending, government sources said.

The social sector boost will be a part of the Centre's larger plan to present a 'feel-good' Union Budget as Prime Minister Narendra Modi looks to capture the narrative after the turmoil from demonetisation.

"The social sector is now one of the main areas of focus. Expect an allocation increase of up to 10% to 12% in some schemes," said a senior official, aware of the deliberations.

A focus here would be to improve 'last mile' implementation of such schemes.

The health ministry, for instance, is banking on the expected increase in funds to the National Health Mission to provide more access to digitised health care services at the primary level.

In 2016-2017, the exchequer allocated Rs 19,037 crore (Rs 190.37 billion) for this Mission.

A ministry source told Business Standard the plan was to make digital records of patients at the ground level. This is apart from helping enable digital payments at health clinics.

This could also benefit the health insurance sector, with a number of providers in the latter segment planning to expand their digital presence.

Experts believe that if there is a centralised health data base, the online health insurance space could work.

As health is a state subject, states will have to partner with the Centre on this. The Centre will, as the NHM model suggests, fund part of the project and leave the rest to the states.

Doing the ground work for this, the government plans to discuss the matter with the World Health Organisation, from the experience of other countries that have succeeded in providing health care services digitally.

Another big announcement would be a scheme for providing health care up to Rs 1 lakh for families below the poverty line.

The prime minister announced the intention in this regard in his Independence Day speech, raising the upper limit from the current Rs 30,000 for such families as in the Rashtriya Swasthya Bima Yojana.

The health ministry will require at least Rs 4,000 cores to Rs 5,000 crore (Rs 40 billion to Rs 50 billion) of budgetary support to pay the insurance premium.

The aim is to roll out the scheme from April 1.

IMAGE: A scene from a hospital in Bihar. Photograph: Archana Masih/Rediff.com