Prime Minister Narendra Modi has asked for a drastic cutback of the ambitious National Health Assurance Mission after cost estimates came in at US $18.5 billion over five years, several government sources said, delaying a promise made in his election manifesto.

The Ministry of Health proposed rolling out the system from April 2015, and in October projected its cost as US $25.5 billion over four years. By the time the project was presented to Modi in January the costs had been pared to Rs 1.16 lakh crore (US $18.5 billion) over five years.

That was still too much. The programme was not approved, three health ministry officials and two other government sources told Reuters. Three officials said the health ministry has been asked to revamp the policy, but work is yet to start.

Modi has had to make difficult choices to boost economic growth - his government's first full-year Budget, announced in February by Finance Minister Arun Jaitley, ramped up infrastructure spending, leaving less federal funding immediately available for social sectors.

The health ministry developed a draft policy on universal health care in coordination with the Prime Minister's Office (PMO) in 2014. The ambitious health care plan aims to provide free drugs, diagnostic services and insurance for serious ailments for the country's 1.2 billion population.

"The constraint on India's financial resources was conveyed to health officials, and even to those from other ministries," said one government official who is not from the health ministry but attended the meeting where the Prime Minister was present.

The meeting was held in January and the discussions were not made public. All of the sources spoke on conditions of anonymity because of the sensitivity of the discussions.

Officials at the PMO and the Ministry of Finance, as well as the health ministry, did not respond to requests seeking comment.

Modi's manifesto ahead of the election that brought him to power in May 2014, accorded "high priority" to the health sector and promised a universal health assurance plan. The manifesto said previous public health schemes, that have been mired in payment delays recently, had failed to meet the growing medical needs of public.

The Prime Minister has another four years left in his first term to fulfil the promise.

The country currently spends about 1 per cent of its gross domestic product (GDP) on public health, but the badly-managed public health system means funds are not fully utilised. A health ministry vision document in December proposed raising spending to 2.5 per cent of GDP but did not specify a time period.

So health experts were dismayed when the Union Budget for 2015-16 raised the allocation for the country's main health department only by about 2 per cent from the previous year, less than inflation. The meagre increase dimmed prospects for the massive health plan, they said.

"How can it happen when you have truncated resources?" a health ministry official asked.



REWORK, DISAPPOINTMENT

The health plan was drafted in consultation with Modi's office and an expert panel, including an expert from the World Bank. The proposal included insurance to cover more expensive and serious ailments such as heart surgeries or organ failure.

Two government officials said this benefit will be withdrawn. The health ministry was also asked why the new plan could not be simply combined with existing health schemes.

The decision to slash the level of insurance coverage will have an impact on India's thriving private health sector, which would have seen huge business growth as the programme channelled millions of new patients into private hospitals.

Currently only 17 per cent of the country's population has some form of health insurance.

Anjan Bose of NATHEALTH, a group that represents such private firms, said the delays in the programme would disappoint both the industry and the public.

"Greater availability of funds for public health care under this programme would have further boosted growth of the private medical industry," Bose said.

(Reuters)