RBI: State spending on public health up from 2005 till now

It rose from two percentage points, from 3% in 2004-05 to 5% in 2021-22

Karnataka’s expenditure on public health, as ratio to aggregate expenditure, increased by two percentage points, from 3% in 2004-05 to 5% in 2021-22 (budgetary estimates), according to the Reserve Bank of India’s (RBI) latest report on “State Finances – A study of Budgets (2021)”.

The State’s expenditure on medical and public health and family welfare was less than 4% till 2011-12 and less than 5% till the onset of COVID-19. The expenditure reached 5.2% in 2020-21 (revised estimates) largely owing to spending on development of health infrastructure for management of the pandemic, the report noted.

Lower than target

The national average expenditure percentage on health is 5.5% in 2021-22 (budgetary estimates). Despite a sharp increase compared to pre-COVID years, it remained significantly lower than the 8% target set by the National Health Policy 2017.

Among 31 States and Union Territories (UTs), 21 States and UTs expenditure was higher than the national average. NCR Delhi’s expenditure percentage (14.4%) is highest among all States/UTs while the expenditure percentage of Telangana (2.5%) is the lowest among States/UTs. Punjab (3.5%) too spends less on public health.

As most of the States, Karnataka too had released its Budgets for 2020-21 before the outbreak of the first wave of COVID-19. There were large deviations between Budget estimates for the year and the revised estimates (RE) as well as provisional accounts (PA). Karnataka borrowed ₹96,000 crore in 2020-21 to meet increased expenditure on health infrastructure owing to pandemic. It proposed to borrow over ₹70,000 crore in 2021-22.

In 2021-22 too, most States presented their Budgets before the spread of the second wave. However, deviations from BE are expected to be smaller than in 2020-21 because of less stringent and State-specific restrictions than the nationwide lockdown imposed a year ago. However, the impact of the pandemic on the State finances turned out to be more severe than anticipated, the report said.

Relief expenditure

Karnataka’s revenue expenditure increased sharply owing to the measures taken to support life and livelihood. For instance, Odisha, Kerala, and Karnataka, have explicitly announced relief packages amounting to around ₹22,000 crore (0.1% of GDP). The Tamil Nadu Government incurred additional expenditure of ₹17,618.8 crore on COVID-related relief, RBI said.

Expenditure on education declines

Karnataka’s expenditure on education, as a ratio to aggregate expenditure, declined by nearly 1 percentage point, from 12.7% in 2004-05 to 11.8% in 2021-22 (budgetary expenditure), according to the RBI’s latest report in 2021.

The country’s average expenditure percentage on education is 13.9%. While NCR Delhi’s expenditure of 22.8% is highest among all States and UTs, Telangana recorded the lowest aggregate expenditure of 5.9%.

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