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NRHM financial wrongdoings reflect systemic irregularities

Prioritizing healthcare for India's rural poor

Prioritizing healthcare for ’s rural poor (Photo credit: Gates Foundation)


It turns out that some state officials were using to enrich themselves
Vidya Krishnan

New Delhi: The National Rural Health Mission (NRHM) was launched seven years ago with the goal of improving healthcare delivery to people in villages, especially the poor, through a generous infusion of federal funds. Local authorities were given a relatively free hand in deciding how to spend the money, with the Centre promising funds with no strings attached for the first seven years.

It turns out that some state officials were using NRHM to enrich themselves instead, raising questions about oversight, governance and accountability at the government’s marquee public health programme, which has won a five-year extension because many of its goals, such as significantly reducing child mortality and improving maternal health, haven’t been met.

Last month, several senior officials of Madhya Pradesh’s health department came under investigation for allegedly siphoning off Rs800 crore from the programme’s budget.
That follows a corruption scandal surrounding NRHM in after allegations that Rs5,700 crore was embezzled from the scheme by health department officials during the regime of Mayawati’s Bahujan Samaj Party, which was ousted from power in the February-March assembly elections.

Six officials directly associated with the scheme in India’s most populous state died in controversial circumstances, one of them in police custody.

In , health director Amarnath Mittal, who was overseeing NRHM’s implementation in the state, was suspended after income-tax (I-T) raids led to the recovery of evidence that he possessed unaccounted property worth Rs100 crore, according to Siddharth Chaudhary, superintendent of police, Lokayukta, an independent anti-corruption body that holds oversight of the state government.

Some Rs38 lakh in cash, 2.5kg of gold, jewellery worth Rs.72 lakh, foreign currency (€3,000 and 1,080 Australian dollars) and documents claiming titles for 50 acres of land were seized in the raids, Chaudhary said.

Public health experts say the case illustrates the larger malaise of corruption in India rather than fault lines in the programme that allowed flexible spending at the grassroots level.

“There is a need to delink the scheme from the system. The problem is not with NRHM’s design, but with governance,” said Amit Sengupta, co-convenor of the People’s Health Movement. “NRHM has been implemented efficiently in many states. Corruption at this level and of this kind—where bureaucrats are amassing Rs100 crore—does not happen without the connivance of elected representatives.”

“Besides, there are vested interests that want NRHM-like schemes to fail so that the argument in favour of outsourcing services to the private sector is strengthened,” Sengupta added. “There is a lot of evidence that there is connivance between government officials and private sector.”

The alleged financial wrongdoing in NRHM reflects the systemic irregularities that plague centrally funded schemes, including the Mahatma Gandhi National Rural Employment Guarantee Scheme and the Jawaharlal Nehru National Urban Renewal Mission, said Sidharth Sonawat, assistant director and healthcare analyst at industry lobby group Federation of Indian Chambers of Commerce and Industry.

“This is a result of giving large amounts of funds, poor administering at state-level organizations and even worse monitoring from the Centre,” Sonawat said. “In the case of NRHM, district-level officials to elected representatives seem to be aware of the irregularities; otherwise such blatant, systemic corruption cannot exist in isolation.”

According to officials in the Madhya Pradesh , recent raids have established a payoff between the state’s health department and the procurement cell, Laghu Udyog Nigam. These officials didn’t want to be identified because they are not authorized to speak to the media.

An audit by the Accountant General of Madhya Pradesh, the apex body for compiling and preparing state-level accounts of public spending, has revealed that the health department incurred expenditures worth Rs67 crore without having budgetary provisions or approvals from the Union government.

In a letter dated 7 May, the audit officer sought a response from Ravindra Pastore, NRHM mission director for Madhya Pradesh.

The investigative arm of the Lokayukta is currently probing 13 cases of misuse of office against health commissioner Manohar Agnani and nine cases against Mittal, but is yet to link them to NRHM.

“As of now, Mittal’s raid is being treated as a case of disproportionate assets and we have not yet linked it to NRHM even though he was heading the department that rolled out the health scheme,” said Chaudhary.

“Besides disproportionate assets case, we received complaints alleging irregularities under various NRHM schemes in March and we have started our investigations,” he added.

While Mittal declined to comment, Agnani maintained that the cases of irregularities have been exaggerated and that he was “unaware that contracts had been given to blacklisted firms, substandard material procured at inflated rates, and unqualified officials had been employed”.

“My director (Mittal) would be best placed to answer these queries,” he said.

The department’s previous commissioner, Rajesh Rajora, is currently under suspension for irregularities to the tune of Rs11 crore, according to official data. Previous mission director Ashok Sharma was suspended in 2008 after Rs130 crore was allegedly recovered from his residence by I-T officials in a raid. Sharma was reinstated in 2010 and is currently director, health services.

“They (I-T officials) recovered only Rs27,000 from the raid at my residence. Subsequently, judicial inquiries were conducted in nine cases in which no irregularity was found,” Sharma said. “All those cases have been closed.”

Madhya Pradesh health minister Ajay Vishnoi resigned in 2008 on moral grounds after I-T officials raided 56 places in the state and unearthed evidence of a nexus between politicians, bureaucrats and suppliers.

This time, cases being investigated by the state’s Lokayukta include procurement of an insecticide under the anti-malaria programme, causing the exchequer a loss of approximately Rs70 crore; imposing monopolies in the purchase of ingredient used for analysis of blood samples that caused a loss of Rs20 crore; appointments in the health department that did not follow prescribed procedures; and favouring of two companies—Nitapol Industries and Kilpest India Ltd—that were blacklisted by the Gujarat government for supplying substandard insecticides.

Both the companies declined to comment on the matter.

NRHM was launched with a budget of Rs6,730 crore; the outlay swelled to Rs20,822 crore in the latest budget. It aimed at improving health indicators in rural areas, with a special focus on 18 states that lagged behind the rest on key health parameters.

It aimed at reducing the infant mortality rate (IMR) to 30 per thousand live births and the maternal mortality rate (MMR) to 100 per 100,000 live births and the total fertility rate (TFR) to 2.1 nationally, in line with the millennium development goals.

At the time of launch, Madhya Pradesh’s TFR was 3.6 while, MMR and IMR stood at 335 and 76, respectively. Seven years and Rs3,381.93 crore of spending later, the health indicators remain below target at 3.3, 269 and 67, respectively.

Still, the improvement is commendable given the backdrop of leakages, some public health experts say.

“If these figures are to be trusted, the drop in maternal mortality rate is impressive,” said Sakthivel Selvaraj, health economist at the Public Health Foundation of India. “The nine-point drop in infant mortality is also not bad. Overall, it is evident that NRHM has made a dent in these figures despite leakages in the system.”

Last month, the Comptroller and Auditor General (CAG) said it found large-scale financial irregularities in the NRHM scheme during Mayawati’s reign over Uttar Pradesh.

According to CAG’s audit report, funds worth Rs1,768.12 crore were received from the Centre but never shown in state government accounts. The report revealed that the government had not maintained accounts for advances worth Rs4,938.74 crore.

The Central Bureau of Investigation is investigating at least two ministers in Mayawati’s government and several bureaucrats in connection with financial irregularities.

Union health secretary P.K. Pradhan said NRHM could not be faulted because of Uttar Pradesh; anyway, only a portion of the scheme allowed flexible use of funds, he said.

“Because of UP (Uttar Pradesh), everyone is faulting NRHM without seeing how well it is implemented in southern states,” Pradhan said. “The government will never be able to implement any scheme if we start faulting in on this basis. Procurement and construction, etc., are the state government’s prerogative and states with better governance have done well under NRHM. Since funds were easily available in large amounts, a portion was flexible; states which lacked transparency took advantage of this.”

“It is vacuous to blame the system when the issue is individual intention and integrity of state-level bureaucracy and politicians,” Pradhan added.

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