Health Budgeting in India

1. HEALTH BUDGETING IN INDIA
DR SURAJ CHAWLA
DEPARTMENT OF COMMUNITY MEDICINE
PGIMS, ROHTAK

2. Contents
 Introduction
 Health expenditure in India
 Health in union budget 2012
 Overview of financial management under NRHM
 Planning and budgeting in NRHM
 Fund flow arrangements
 Delegation of financial powers
 Re-organization of health facilities and their grants
 Allocation, release and expenditure in NRHM
 Budgeting in National AIDS Control Programme

3. Introduction

4. What is a budget ?
 It is a tool to relate planned resource consumption to a period of
time.
 It is stating in financial terms, the physical activities that have to
be performed during any future period, to achieve the
objectives/ purposes of the organization.
Main features:
 Developed before an event has occurred
 Includes a broad range of resources
 Relates to a specific period of time

5. Why have a budget ?
 To aid in planning of annual operations
 Coordinate activities of various parts of organization
 Control activities
 Evaluate performance

6. Preparing budgets: General guidelines
 Prepared on a realistic basis
 Past actuals should be consulted
 Obsolete items to be deleted
 Lump sum provisions to be avoided

7. Health expenditure in India
 Calling for the 12th Plan to
be specially focused on
health, the Prime Minister
promised that funds
would not be a constraint
in the important areas of
education and health.
 Government has decided
to increase its total health
expenditure to 2.5 per
cent of GDP by the end of
the 12th Plan.

8. Health in Union Budget 2012
S. Allocation for FY 2012-2013 in union budget ₹(in crores)
N.
1. Total allocation for Health and Family Welfare ₹34,488
(An increase of 14% from last FY)
2. Allocation for NRHM (60% of total) ₹20,885
3. Allocation for National Aids Control Organization ₹1,700
(NACO) remains same as that of last year(5% of total)
4. Pulse polio program ₹789
5. Rajiv Gandhi Scheme for Empowerment of Adolescent ₹750
Girls, SABLA
6. Indian Council of Medical Research (ICMR) ₹710
7. Rest will be allocated for Pradhan Mantri Swasthya Suraksha Yojana
(PMSSY) and for the launch of National Urban Health Mission (NUHM) etc.

9. Centrally Sponsored Disease Control
Programmes (Current Scenario)
As a part of NRHM Independent of NRHM ambit
1. Reproductive and Child Health 1. National Program for Prevention
(RCH) Programme and Control of Cancer, Diabetes,
2. Vector Borne Disease Control Cardiovascular Disease and
Programme Stroke
3. Tuberculosis Control Programme 2. Tobacco Control Programme
4. Leprosy Elimination Programme 3. Mental Health Programme
5. Iodine Deficiency Disorder Control
Programme Under Department of AIDS Control
6. Blindness Control Programme National AIDS Control Programme
7. Drug-addiction Control Programme

10. Overview of Financial
Management Under NRHM

11. Programme Implementation
Structure

12. Financial management structures
at GOI level
 In order to ensure efficient financial management a separate
Financial Management Group (FMG) has been formed at the
GoI level which is supported by respective finance units/staff at
state, district and sub-district levels.
 The group is headed by the Director (NRHM-Finance), who is
supported by one Under Secretary, one Section Officer, two
Accounts Officers and various finance consultants.
 All these finance consultants including Finance Controllers,
Finance Analysts and Finance Assistants report directly to
Director (NRHM-Finance).

13. Financial management structures
at GOI level
Broad role FMG are:
 Process timely release of approved funds to State Health
Societies.
 Monitor utilization level at states/districts and identifying gaps.
 Monitor submission of SOEs/ financial reports/UCs from States.
 Carry out monitoring through financial management indicators,
state visits for review and providing support.
 Formulation of financial policies and guidelines time to time.
 Monitor the audit arrangements at the various SHS and ensure
timely appointment of Statutory and Concurrent auditors.
 Claim reimbursement from the Development Partners.
 Training of finance and accounts personnel of states/districts

14. Programme Implementation
Structure (State Level)
SFM- State Finance Manager
SAM-State Accounts Manager
SDO- State Data Operator

15. Financial management structures
at state level
 Each State has a State Health Society (SHS) headed by the
Mission Director(NRHM). Each SHS consists of a State
Programme Management Support Unit (SPMSU).
 The State NRHM Finance must be headed by Director Finance,
who is assisted by the State Finance Manager (SFM), the State
Accounts Manager (SAM) and State Data Officer (SDO).
The broad roles of State finance personnel are:
 Ensure timely fund releases to the District Health Societies.
 Maintenance of books of accounts as per the guidelines.
 Monitor the expenditure and assess the requirements of funds
and then prepare budget estimates.

16. Financial management structures
at state level
 Develop / Refine guidelines for management of funds in the
state/ districts/peripheral level.
 Monitor timely submission of Statement of Expenditure from the
Districts.
 Preparation and timely submission of Financial Monitoring
Report (FMRs), Statement of Fund Position (SFPs), quarterly/
monthly Management Information System (MIS), Utilization
Certificates (UCs) and concurrent audit executive summary to
the MoHFW.
 Facilitate and monitor the Statutory and Concurrent audit by
appointing auditors and ensuring timely submission of reports.
 Organize and conduct training for the district and peripheral
units.

17. Financial management structures
at district level
 At the district level, a District Health Society (DHS) has been set
up to manage the programme activities.
 The finance and accounts activities are managed by District
Accounts Manager (DAM) and a data assistant under the
supervision of a Districts Programme Manager (DPM).

18. Financial management structures
at district level
The broad roles of District finance personnel are:
 Budgeting and Planning for programme implementation.
 Ensure timely fund releases to the Blocks/ CHCs/ PHCs/ SCs.
 Maintenance of books of accounts as per guidelines. Monitor
timely reporting from the Blocks through Statement of
Expenditure every month.
 Ensure timely reporting of expenditure to the State.
 Facilitate and monitor the Statutory & Concurrent Audit by
providing relevant information to the auditors timely.
 Ensuring follow up on audit observations.

19. Financial management structures
at Block level
 The implementation of the programmes starts at the Block level
and the actual utilization of funds initiates from here.
 Block Medical Officer is supported by Block Accountant & Block
Programme Manager (BPM).
 The Block Accounts Manager(BAM) is responsible for disbursing
the funds to the implementing units (CHC/PHC/ Sub Centre/
VHSNC) and monitoring their utilization.
 BAM is also responsible for maintenance of accounting records at
the block level and reporting the utilization to the District.

20. Financial management structures
at Block level
 At CHC/PHC level, accounting and reporting activities are
managed by accountants.
 At Sub Centre level and Village Health, Sanitation and
Nutrition Committees, the fund management and reporting is
controlled by the ANM and ASHA respectively.

21. Key Components of Funds
 At CHC/PHC level, accounting and reporting activities are
managed by the CHC/ PHC accountants.
 At Sub Centre level and Village Health, Sanitation and
Nutrition Committees, the fund management and reporting is
controlled by the ANM and ASHA respectively.

22. Financial Management Cycle

23. Planning and Budgeting in NRHM

24. Planning in NRHM
 Under NRHM, a detailed planning and budgeting exercise is
taken up every year to fix the annual targets for programme
implementation and hence the required budget for them.
 To effectively implement and monitor the activities during the
year, each Implementing Agency in the State is required to
prepare a plan of action.
 This should indicate the targets and budgetary estimates in
accordance with the approved pattern of assistance under the
NRHM.

25. Planning in NRHM
 These should cover all aspects of the programme activities for
the period from April to March each year, and are sent by each
State/ UT to the Ministry of Health & Family Welfare, GoI for
approval well before the start of the year.
 It is important that the action plan is realistic, practically
implementable and correlates the physical outputs with the cost
estimates.

26. Planning in NRHM
 NRHM follows a Bottom Up approach for planning and
budgeting. The process begins at the block level, which prepares
the “Block Health Action Plan” based on inputs/discussions with
the implementing units and sends to the District.
 These Block Health Action Plans are then aggregated to form
an “Integrated District Health Action Plan (IDHAP)” which is
further sent to the State Level. The DHAPs of all districts are
compiled and aggregated at the state level for framing the
“State Program Implementation Plan (SPIP).
 All SPIPs are reviewed and compiled to estimate the next year's
fund requirements for programme implementation activities
under NRHM.

27. Planning in NRHM
 This requires setting up of planning teams and committees at
various levels i.e. at Habitation/Village, Gram Panchayat (SHC),
PHC (Cluster level), CHC/Block level and District level.
 At Village, PHC and Block levels, broadly representative
committees perform both planning and on-going monitoring
functions.
 A similar committee at the District level would be involved in
reviewing the plans, based on drafting by the specialized district
planning team.

28. Hierarchy of plans

29. Resource Allocation
 The MoHFW follows equity-based approach to allocate funds
under NRHM to various States. The overall allocation is made
on the basis of population of the states.
 An additional weightage has been assigned to the NRHM
priority States to ensure enhanced allocation of resources to
states with weak socio-economic and health indicators.
 The 8 EAG states have been assigned weightage of 1.3, North
Eastern States have been assigned the weightage of 3.2 and
other states have been assigned weightage of 1.

30. Resource Allocation
 This approach ensures more resources to the States those are
critical for achieving the objectives of NRHM.
 Under NRHM, probably a maximum of 10% of funds are to be
spent at the State level, 20% at the District level and at least
70% at the block level and below so that maximum benefits of
affordable and quality health care reaches the people at the
grass root level.

31. Resource Allocation
 The states also need to allocate funds to the districts on an
equitable basis.
 Socio-demographic variables like rural/urban distribution;
proportion of SC/ST and vulnerable groups; districts with adverse
health indicators; difficult, most difficult and inaccessible areas
etc. are considered while allocating resources to the districts.
 A combination of such criteria and a weighted measure of 1.3 to
high focus districts and 1.0 to the other districts is used to allocate
funds to the districts.

32. Resource Envelope
 The Resources allocated to a particular state for any given
financial year is termed as the “Resource Envelope”.
The resource envelope for a Financial Year consists of:
 Uncommitted Unspent Balance
 GoI Allocation proposed for the year
 State Share Contribution due for the year

33. District Health Action Plan (DHAP)
 The DHAP depicts the resource requirements at various sub
district level units for programme implementation in terms of
infrastructure, HR, procurement, various schemes running etc.
and provides an overall budget required for the District to
execute those activities.
 The District Health Mission is responsible for the preparation of
DHAP which needs to be done by constituting a Planning team
responsible for providing overall guidance and support to the
planning process.
 Preparation process of DHAP includes consolidation of the Block
Health Action Plans.

34. Preparation of Block Health Action Plan
 Block Health Action Plan is the responsibility of the Block/CHC level
Planning and Monitoring committee which constitute of Block
Panchayat Adhyaksh, BMO, NGO/CBO representative and head of
CHC level RKS.
 PHC level Health Plan are made by the PHC Health Monitoring and
Planning committee which facilitate planning inputs from Panchayat
representatives along with inputs from the community.
 Gram Panchayat level Health Plan are made by Gram Panchayat
Pradhan, ANM, MPHW and few VHSC members
 VHSC is responsible for Village Health Plan

35. Key considerations while drafting
State PIPs
 Funds released under NRHM do not lapse at the close of the
Financial Year but are carried over to the next Financial Year.
 The states need to show the quantum of usage of funds in the
previous year and the quantum of unspent funds lying with
them.
 The previous year funds lying with the states need to be clearly
demarcated and shown in the form of committed and
uncommitted unspent balances.

36. Key considerations while drafting
State PIPs
Committed Unspent Funds:
 These funds are meant for those activities for which
implementation have already started, are underway, or have
been approved but not implemented fully.
 These balances need to be indicated by the state activity wise
while proposing the PIP for the next Financial Year.
Uncommitted Unspent Funds:
 The funds lying with Districts and sub district which could not be
committed for utilization during the year should also be worked
out and incorporated in State level unspent balances.

37. Key considerations while drafting
State PIPs
 All the civil construction work should be taken up only after
including the manpower & equipment requirements so that a
large portion of public funds is not blocked in unutilized
buildings.
Ceiling on Programme Management Costs:
 A maximum of 6% of approved SPIP may be spent on
programme management activities (Administrative Expenses)
such as hiring of consultants coming under the ambit of
programme management, monitoring and evaluation, audit
expenses, mobility support, office expenses, purchase of
computers, office furniture & fixtures, fax machines etc.

38. Key considerations while drafting
State PIPs
One FRU in each block:
 The basic aim of NRHM is to provide healthcare facilities in the
remotest parts of the state.
 Hence, planning and budgeting of SPIP should meet the basic
necessity of providing a functional FRU in each Block comprising
of 1,20,000 population in plain areas and 80,000 population in
hilly, tribal and remote areas of the State.

39. Key considerations while drafting
State PIPs
State's Share:
 The states participate with the centre in funding the NRHM
programme.
 At present states are required to contribute 15% of the total
amount released. From XIIth Plan (2012-2017) onwards, the
relative share of the states may increase in due course.
 It should be ensured that there is no substitution of the state
expenditure by Central expenditure.

40. Process of approval of PIP

41. Concept of Sub-groups
 Concept of Sub-groups has been introduced for the purpose of
effective review & analysis of PIPs received from the States and
efficient coordination with state level for the purpose of carrying
out necessary revisions and approval of the PIPs.
 The sub groups constitute officers/ consultants from MoHFW and
state level.
 Each group consists of a Group Leader, Nodal Officer, Assistant
Nodal Officers and few members (including Deputy
Commissioners, Assistant Commissioners etc.)
 Nodal officer is the contact person for the group and coordinates
with the members of the group to carry out the tasks and
responsibilities assigned to the group.

42. Concept of Sub-groups
The overall responsibilities of the sub groups:
 Studying the profiles of States/ UTs, past PIPs and RoPs of states/
UTs.
 Study the draft PIP submitted by the states/ UTs and furnish
comments.
 Share the comments on the Draft PIP for revision of PIP.
 Examine the revised PIP with reference to decisions taken in the
Sub-Group Meetings.
 Participate in National Programme Coordination Committee
(NPCC) meetings and prepare Record of Proceedings (RoPs) of
the NPCC meetings for the respective states.

43. Timelines
 The Financial Year beginning from 1st of April is the enforcement
date of the Annual Project Implementation Plans.
 Hence, the budget needs to be approved and communicated at
all levels before this date.
 The success of budgeting exercise is dependent on adherence to
time schedules. Delays in submissions and approvals can delay
the finalization of the PIPs.
 Hence, NRHM specifies the dates by which submissions and
approvals need to be carried out.

44. Timelines for submission of SPIP
and DHAP
Submitting Approving Date for Date for Approval
Authority Authority Submission
District State 31st Oct 15th March
State Centre 31st Dec 28th Feb

45. Detailed probable timeline

46. Revision of budget
 After the finalization of the RoP, the state can place an
additional demand for funds for any specific purpose to the
Ministry.
 After review and feedback from the concerned programme
divisions, the Ministry may approve or disapprove the request.
 In case of an approval, a letter shall be issued to the state
notifying the approved amount and the subsequent change in
the RoP of the state.

47. Fund flow arrangements

48. Key sources of funds
The funds given to the State Health Societies mainly consist of the
following components:
 Grants-in-aid - Made by or through MoHFW, GoI
 Contribution by the State Government - As per NRHM
Framework of Implementation, all States and UT Health
Societies receiving grants from the Central Government will
contribute in the ratio of 85:15.

49. Key sources of funds
Key requirements in this regard are given below:
 The state contribution made by the State Government will be
booked as expenditure in the State Budget at the time of its
release to the SHS.
 For utilization, the state contribution can be proportionately
utilized among the different programmes or the same can be
utilized on any or all programmes/activities considering their
priorities and requirement of funds for such programmes under
intimation to the Ministry.

50. Timelines for release of funds

51. Banking Arrangements

52. Delegation of Financial Powers

53. Authorized Signatories to Bank
Accounts

54. Authorized Signatories to Bank
Accounts

55. Re-organization of Health Facilities
The Sub-Centres/ PHCs who are not designated as MCH Centres
and do not conduct institutional deliveries shall receive Untied
Funds and RKS Funds at the following scale:
Sub-Centre
 Untied Funds – Rs. 10,000
Primary Health Centres
 Untied Funds – Rs. 25,000
 RKS Grants – Rs. 25,000
Annual Maintenance Grants have been kept at same level for all health facilities

56. Differential Financial Approach for RKS Grants and Untied Funds
The Sub-Centres/ PHCs who are not designated as MCH Centres
and do not conduct institutional deliveries shall receive Untied
Funds and RKS Funds at the following scale:
Sub-Centre
 Untied Funds – Rs. 10,000
 Annual Maintenance Grants – Rs. 10,000
Primary Health Centres
 Untied Funds – Rs. 25,000
 Annual Maintenance Grants – Rs. 50,000
 RKS Grants – Rs. 25,000

57.  Allocation, release and expenditure in NRHM
 New IPHS 2012

58. Budgeting in National AIDS Control
Programme

59. NACO - Project Implementation Setup
Performance Based Budgeting
(PBB)

60. Calendar of Annual action plan

61. References
 Operational guidelines for Financial Management in NRHM
http://mohfw.nic.in/showfile.php?lid=985
 Financial Management guidelines NACO
http://nacoonline.org/upload/Policies%20%26%20Guideline
s/19,%20Operational%20Guidelines%20forFinancial%20M
anagement%20Final.pdf
 http://health.india.com/diseases-conditions/union-budget-
2012-13-healthcare-sector-highlights
 http://articles.timesofindia.indiatimes.com/2011-11-
19/india/30419399_1_health-sector-12th-plan-universal-
health-coverage
 http://accountabilityindia.academia.edu/AvaniKapur/Papers/
1712107/National_Rural_Health_Mission_2012-13

62. Thank You