India is one of the LMIC countries where health spending has declined since its peak during the pandemic.
Recent trends in government health spending in low-income countries (LICs) and lower-middle-income countries (LMICs) show a worrying shift as countries approach the deadline for the Sustainable Development Goals. A World Bank paper examines government health spending in 63 LICs and LMICs by analyzing data from 2019 to 2023, comparing pre-pandemic trends from 2015 to 2019.
The study highlighted an initial spike in health spending during the pandemic followed by a steady decline. While the initial spending cuts appeared to be temporary, the analysis suggests the reductions are more permanent, challenging the momentum needed for health-related SDG targets. In particular, LICs and LMICs experienced a decline in per capita health spending.
Between 2019 and 2023, government health spending per capita increased only slightly, limited by the declining share of health in the general government budget as general government spending grew faster than health spending. This shift reverses the pre-pandemic trend where health continues to be a priority in the national budget. The impact is greatest in LICs, where health funding remains minimal and relies heavily on external aid.
The paper outlines the risks for 35 countries, including India, where government health spending per capita and the share of the health spending budget have declined. In these 23 countries, International Monetary Fund forecasts show a likely contraction in government budgets from 2023 to 2029, which could force policymakers to make tough trade-offs to maintain health spending.
Chart 1 shows average real government health expenditure per capita by income group (constant US$ 2023). Includes data for 63 countries.
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In 2023, average real government health spending per capita continues to decline from the peak observed in response to the pandemic. In LICs, spending increased in 2020 but began to fall back to almost pre-pandemic levels, reaching around $10 per capita in 2023. Similarly, in LMICs, spending declined from the 2021 peak.
Recent reductions in government health spending have resulted in only modest growth rates during the pandemic and recovery period. From 2019 to 2023, the average real annual growth rate of government health spending per capita is only 0.4% in LICs and slightly higher at 0.9% in LMICs.
Chart 2 shows the annual growth rate of real GHS per capita by income group (in %)
This modest growth rate is in stark contrast to the pre-pandemic period. Between 2015 and 2019, the average real annual growth of government health spending per capita was higher, at 4.2% in LICs and 2.4% in LMICs.
Chart 3 shows the average government health expenditure to government health expenditure ratio by income group (in percent).
In 2023, the share of general government allocated to health continues to decline from the peak of the pandemic. In LICs, this decline begins mainly in 2021, with the share of health spending falling to 5.6%. In LMICs, the decline starts a year later and is less pronounced, with the government health spending to general government expenditure ratio falling to 6.5% in 2023. The reduction is driven by negative growth in government health spending per capita, while general government expenditure per capita . GDP will remain stagnant or grow slightly in the years starting in 2021.
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India is one of the LMIC countries where health spending has declined since its peak during the pandemic.
Chart 4 shows trends in health spending as a percentage of the total budget over the years.
The share of health in the budget exceeded the 2% mark in FY18 and remained elevated during the pandemic years, only to decrease to 1.75-1.85% in the following years.
Published – 13 November 2024 08:00 IST
