Fixing India’s Healthcare Spending

India is on a mission to provide equitable and accessible healthcare to its 1.4 billion people. With ambitious schemes like Ayushman Bharat and the National Health Mission (NHM), the government has taken significant steps to improve public health. Yet, a glaring reality persists: healthcare spending in India remains inefficient, and millions of rupees go underutilized every year. How do we fix this?

Imagine a system where every rupee allocated for healthcare is tracked in real time, ensuring timely fund disbursement and measurable impact. It is achievable through modern fiscal management tools, standards, and practices. This article explores how India can make its healthcare budget more effective and transparent, transforming its health financing landscape.

The health budget puzzle

India allocates a modest 1.28% of its GDP to public health, far below global averages. For FY 2023-24, the government allocated ₹35,947 crore to the NHM, an 8% increase from the previous year. However, inefficiencies plague the system. In FY 2021-22, 92% of available funds under NHM were spent, but utilization dipped drastically in FY 2022-23, with only 6% of funds utilized by mid-year.¹

The Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) highlights similar inefficiencies. While ₹7,200 crore was allocated for FY 2023-24—a 12% increase from FY 2022-23—only 18% of the budget had been utilized by December 2022.²

At the state level, high-focus regions like Uttar Pradesh and Bihar face even more challenges. In FY 2021-22, Uttar Pradesh spent less than 80% of its approved funds, and Bihar managed only 45%. Per capita health expenditure for FY 2021-22 was ₹140 and ₹141 in these states, among the lowest in the country, compared to Kerala’s ₹223.

Why do inefficiencies persist?

India’s healthcare financing inefficiencies stem from two critical issues: multiple levels of approvals and fragmented systems. Both challenges arise because granular, trusted data is either unavailable or lacks verifiable audit trails.

1. Multiple approvals

Approvals are often sequential because fiscal and service data are aggregated at different levels and not trusted at source. For instance, ASHAs frequently experience delays in receiving their payments because records require manual verification at each level of governance, reflecting a lack of trust in existing data flows. This is because data capture at source is often paper-based or not unitary in nature.

2. Fragmented systems

Health service delivery and financing operate across multiple disconnected systems. For example, PFMS tracks financial transactions, while HMIS monitors health outcomes. The absence of integration between these systems leads to delayed fund flows, poor real-time visibility into utilization, and redundant manual processes like reconciliation of data.

The case for trusted and standardized information flow

To address these inefficiencies, India needs to adopt digitally signed and standardized data protocols that ensure trust and interoperability. By enabling fiscal and service data to flow seamlessly, verified at the source, approvals can become instantaneous.

For example, a health worker’s attendance or service completion (e.g., delivering immunizations) can be digitally signed and verified in real time. This data can flow across systems via open protocols, eliminating the need for manual validation.

Introducing iFIX: An integrated solution

The Integrated Fiscal Information Exchange (iFIX) is a federated, standards-based platform designed to address these challenges. As a protocol, iFIX defines how fiscal events (such as demands, receipts, payments, and utilization) can be securely exchanged across systems. As a platform, it simplifies adoption by connecting existing digital systems without requiring overhauls.

Unlike a centralized registry, iFIX enables federated registries owned by competent authorities while maintaining interoperability. This approach empowers central and state agencies to coordinate governance while preserving their autonomy.

Health service delivery systems in India are at varying stages of maturity across states. These systems generate service events—such as completed immunizations or delivered medicines—and associated fiscal events. iFIX integrates these into a unified ecosystem, ensuring fiscal accountability and service delivery alignment.

How iFIX can help solve the expenditure and transparency problem

1. Real-time fund tracking: Policymakers can use iFIX dashboards to track NHM allocations in rural Uttar Pradesh or monitor whether district hospitals in Bihar have received funds for essential equipment. This transparency reduces delays and ensures timely resource distribution.
2. Adaptive resource allocation: iFIX consolidates data from fragmented systems, enabling facilities to reallocate funds across budget heads (e.g., from equipment to medicines for a seasonal outbreak) without compromising accountability. This agile decision-making ensures resources meet community needs.
3. Real-time utilization certificates (UCs): By generating UCs automatically from digitally signed fiscal events, iFIX eliminates delays in reporting fund utilization. This flexibility allows health schemes to adapt to region-specific funding needs.
4. Eliminating manual verification: Trusted, signed data removes the need for sequential approvals. For example, ASHA payments can be processed directly upon task completion, verified by digitally signed proof of work.
5. Interoperable data exchange: iFIX ensures systems like PFMS and HMIS can exchange data seamlessly through open protocols, creating a common language for fiscal and service delivery data.

Concrete steps to implement iFIX

1. Establish specifications committee: The Ministry of Health and state health departments should form a committee to define standards for fiscal and service data interoperability, akin to W3C for web protocols.
2. Pilot federated models: Launch pilot programs in high-focus states like Uttar Pradesh and Bihar to test interoperability and real-time data exchange.
3. Develop open-source tools: Build open-source implementations of iFIX to ease adoption by government agencies and ensure transparency.
4. Promote capacity-building: Train health administrators, finance officers, and frontline workers to use digital systems effectively.
5. Incentivize adoption: Provide funding and technical support to states that adopt iFIX, ensuring rapid scaling across the country.

A healthier, more transparent India

The ultimate goal of healthcare financing isn’t just tracking funds but improving lives. By ensuring every rupee is used effectively, India can achieve:

• Better health outcomes: Timely and targeted spending improves services like immunizations and maternal care.
• Equity in healthcare: Transparency ensures vulnerable populations receive their fair share of resources.
• Public trust: Citizens gain confidence in government systems when spending is efficient and impactful.

A glimpse into the future

Picture this: A rural health worker in Uttar Pradesh no longer waits months for her payments. She completes her tasks, logs them digitally, and receives her incentives directly into her bank account within days. Meanwhile, state health officials use real-time dashboards to track program performance, reallocating resources to areas with the greatest need.

This future isn’t far off. With tools like iFIX, India has the opportunity to transform its healthcare financing system into one that is transparent, efficient, and equitable. It’s time to make every health rupee count. Please read here to know more about how iFIX has been deployed in revenue use cases in water resources management in Punjab, and expenditure use cases in urban wage employment programs in Odisha.

References:

1. NHM budget briefs – Accountability Initiative
2. Ayushman Bharat budget briefs – Accountability Initiative/