The NDA government has ordered a surprise cut of nearly 20% in its current healthcare budget, according to sources in the health ministry. India’s public spending on health is already among the lowest in the world. With this reduction, key disease control initiatives will be at risk.

Two health ministry officials told Reuters on Tuesday that more than 60 billion rupees ($948 million) has been slashed from their budget allocation of around $5 billion for the financial year ending on March 31.

According to Reuters, public healthcare has never been an important for successive governments and this has resulted in a dilapidated network of government hospitals and clinics, especially in rural areas. India spends a mere 1% of its gross domestic product (GDP) on public health, compared to 3% in China and 8.3% in the United States.

Despite rapid economic growth over the past two decades, successive governments have kept a tight rein on healthcare expenditure. With Narendra Modi’s victory in May, there were hopes that he would upgrade basic health infrastructure and make medical services more affordable for the poor.

"We were not expecting (budget cuts) this time because of the commitments they (BJP) made in the manifesto," one of the health ministry officials said.

"No reason was given ... but there is shortage of funds. It is not rocket science," he added.

The move reflects the government's struggle to achieve its 2014/15 fiscal deficit target of 4.1% of GDP. One of the health ministry officials said the cut could affect efforts to control the spread of diseases.

The shortage of funs could also derail an ambitious universal healthcare programme that Modi wants to launch next April. The plan aims to provide all citizens with free drugs and diagnostic treatments, as well as insurance benefits.

The cost of that programme over the next four years had been estimated at 1.6 trillion rupees ($25 billion). The health ministry officials had been expecting a jump in their budget for the coming year, in part to pay for this extra cost.

In addition to cut in the healthcare budget, the finance ministry has also ordered a spending cut for the country’s HIV/AIDS programme by about 30% to 13 billion rupees ($205.4 million).

India had the third-largest number of people living with HIV in the world at the end of 2013, according to the UN AIDS programme, and it accounts for more than half of all AIDS-related deaths in the Asia-Pacific.

"We are all in shock. That shows the kind of importance the government attaches to public health," said Leena Menghaney, a public health activist told Reuters. "This will undermine the HIV programme in the long run."

- Karan Singh

To Learn More:

India slashes health budget by 20% (by Aditya Kalra, Reuters)

India: Government slashes health budget by $947m (by M Rochan, IBT)