Taskforce On Infrastructure Cuts Healthcare Allocation In Final Report
While the Covid-19 pandemic has bared inadequacies in the India’s healthcare, a taskforce preparing a fresh infrastructure spending road map has lowered allocation to the sector from what it recommended in the interim report.
The Task Force on National Infrastructure Pipeline, headed by Economic Affairs Secretary Atanu Chakraborty, suggested a spending of Rs 1.51 lakh crore in five years ending March 2025 on health and family welfare, according to the final report submitted on April 29. That’s lower than 1.5 percent of the overall Rs 111 lakh crore infrastructure spending target. And it’s less than Rs 1.69-crore share in Rs 103 lakh crore total spending suggested in the December interim report.
Healthcare, clubbed with social sector, ranks alongside ports and airports. The biggest allocations go to power, roads, railways, irrigation, urban and rural infrastructure.
India has implemented the world’s strictest lockdowns to contain the new coronavirus amid fears that the nation’s healthcare infrastructure will be overwhelmed when even developed nations struggled to manage the load. While confirmed infections are way below the some of the other countries, the country has conducted much fewer tests per million population.
To be sure, preparations on the National Infrastructure Pipeline report began much earlier than the Covid-19 outbreak. The final version, however, outlines the focus areas for 2019-2025.
The taskforce’s allocations contrast with its suggestions on improving healthcare infrastructure. While it lowered the share of health and family welfare expenditure in the final report, the report said higher government spending is needed in the sector.
“The way forward is to increase the public expenditure on health to at least 2.5% of GDP, which is nearly double of the current rate of health spending,” the report said, citing sub-optimal access to quality healthcare and lower per capita spend on healthcare.
That will help in upgrading the existing government healthcare facilities by adding more beds and diagnostic facilities, it said. “There is also need to ramp up medical colleges in order to address shortage of well qualified medical professionals.”
- Exploring public private partnership in medical education
- Scaling up India’s medical devices and diagnostic equipment manufacturing under “Make in India” initiative
- Use of tele-consultation which will link tertiary care institutions to district and sub-district hospitals which provide secondary care facilities.
A pandemic such as the Covid-19 shows the need for a concerted focus and investment in our public health system, Charu Sehgal, leader-lifesciences and healthcare at Deloitte India, told BloombergQuint. Events of this magnitude cannot be tackled by private investment and infrastructure alone, and need a centralised policy and a coordinated response, she said.
The report allocated Rs 3.93 lakh crore to social infrastructure, including higher and school education, health and family welfare, sports and tourism. That’s higher than Rs 3.56 lakh crore proposed in the interim report.
The National Infrastructure Pipeline taskforce was set up in September 2019. Besides Chakraborty, it comprised NITI Aayog Chief Executive Officer Amitabh Kant, Expenditure Secretary TV Somanathan, Additional Secretary of Department of Economic Affairs K Rajaraman, and Joint Secretary Baldeo Purushatha and KV Pratap as members.
According to the report, India would need to spend $4.51 trillion on infrastructure by 2030 to become a $5 trillion economy by 2025.
Of the Rs 111 lakh crore, the plan suggests spending 24 percent in the energy sector, 18 percent in roads, 17 percent in urban infrastructure, 12 percent in railways, and the rest on airports, agriculture and food processing infrastructure, industrial infrastructure, among others.
- The share of the central government and the states in the projects would be 39 percent and 40 percent, respectively, while the private sector would contribute 21 percent.
- Projects worth 40 percent of the total plan are under implementation, 30 percent are at the conceptualisation stage, 20 percent are under development, and information is not available about the remaining 10 percent.
The report suggested making the legal framework for settling infrastructure disputes more transparent, and setting up special and designated courts for quick resolution.
Slowdown due to the pandemic is a good time to catch up on infrastructure capacity and increasing the expenditure, said Manish Agarwal, partner at PwC India. Infrastructure spend should be a critical component of the fiscal stimulus that the government may announce, especially for the multiplier effects it has on the economy and job creation, he said.
India should also take steps to attract more institutional investors and sovereign wealth funds to invest in infra projects by de-risking the sector, Agarwal said.
Here are other key highlights of the report:
- The report suggests forming a steering committee in the Department of Economic Affairs for raising financial resources for infrastructure projects.
- It recommends setting up a well-capitalised credit enhancement fund to improve rating of projects to easy investments by institutional investors in infrastructure through capital market instruments.
- Channelling resources from the pension and insurance sector into the infrastructure bond market.
- Strengthening the municipal bond market in India
- Developing infrastructure financing institution IIFCL as a development finance institution in consultation with the Reserve Bank of India.
- Monetisation of assets by government departments and public sector entities to reduce debt burden and invest in asset creation.
- Creation of a tool to monitor projects under development.
- A steering committee of lenders and equity investors to monitor compliances, resource mobilisation and design.
- An empowered committee for clearance of large projects.