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Govt spends, including health, muted in FY218; will they catch up?

The reason for muted spends during first eight to nine months on the health sector could possibly be attributed to non-provision of other health services during lockdown and for some subsequent months

twitter-logoNiti Kiran | January 12, 2021 | Updated 01:13 IST
Govt spends including health remain muted in 8 months; likely to catch up
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Government spending has remained muted so far, up just 4.7 per cent till November compared to 12.8 per cent increase in the matching period last year.  In the wake of the pandemic, the Finance Ministry put in place a control-based expenditure management in April that is clearly discernible in ministry wise expends including health -- it is pertinent to mention as this unprecedented crisis requires an extraordinary response.

In the past eight months, only disbursements under rural development ministry crossed above the halfway mark with almost 76 per cent increase from the corresponding period last year. The other two ministries that followed up closely were civil aviation and communications with a 48.1 per cent and 47.4 per cent rise, respectively. Only 13 ministries succeeded in spending more than last year with health department managing just over 16 per cent.  

In terms of meeting their budget targets, the overall spends have reached 62.7 per cent of the estimates this year as against 65.3 per cent during the corresponding period of FY20. Yet again, rural and consumer affairs, food and public distribution ministry overspent compared to an expenditure close to 69 per cent of their estimates in previous fiscal. Altogether, 22 ministries have expended over 50 per cent of their budget targets till date -- expenses of ministry of health and family welfare have shot up only 6.7 per cent points from the previous period, to 74.3 per cent of their current year projections.

The reason for muted spends during first eight to nine months on the health sector could possibly be attributed to non-provision of other health services during lockdown and for some subsequent months, explains Ranen Banerjee, partner and leader economic advisory services of PwC India. "As the OPDs were suspended and there was fear among the general population in visiting hospitals, these may have also impacted the spend. Several immunisation efforts, HIV programs and other communicable and non-communicable disease prevention programs got impacted owing to the lockdown. Thus, the spend could not have been to the extent of the previous year," she adds.

Further, the government has sought Parliament's approval for additional spends with a substantial chunk being deployed for its flagship rural employment guarantee scheme MGNREGA. This includes Rs 5915.5 crore of additional expenditure towards Grants-in-aid for containment of pandemic and Rs 2,475 crore for creation of capital assets for emergency epidemic preparedness and response for Indian Council of Medical Research. "The spend is likely to pick up in the last 4 months of the year. The cash basis of accounting of spend leads to lower spend reports though actual goods/service delivery may have picked up pace.  There are thus possibilities of some payment backlogs getting cleared as the revenue position improves for the government and we are likely to witness some catch up in the spend numbers at the end of December numbers," adds Banerjee.

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