The Union Cabinet’s approval of the Pradhan Mantri Swasthya Suraksha Nidhi (PMSSN) has recently garnered attention. PMSSN is a non-lapsable reserve fund for health generated from the proceeds of the Health and Education Cess, which is levied under Section 136-b of Finance Act, 2007.
Description and Key Points of the Pradhan Mantri Swasthya Suraksha Nidhi (PMSSN)
PMSSN serves as a public account reserve fund for Health where proceeds from Health and Education Cess are credited. The accruals within the PMSSN are used in various flagship schemes of the Ministry of Health & Family Welfare. Such schemes include Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (AB-PMJAY), Ayushman Bharat – Health and Wellness Centres (AB-HWCs), National Health Mission, Pradhan Mantri Swasthya Suraksha Yojana (PMSSY), as well as emergency and disaster preparedness.
Additionally, funds from the PMSSN may be allocated to any future program or scheme that pushes for progress towards Sustainable Development Goals (SDGs) and the goals indicated in the National Health Policy (NHP) 2017. The Ministry of Health & Family Welfare (MoHFW) is tasked with the administration and maintenance of the PMSSN.
Financial Management and Benefits of PMSSN
During each fiscal year, initial expenditure on the MoHFW’s schemes will come from the PMSSN, to be followed by Gross Budgetary Support (GBS). One of the much-touted benefits of the PMSSN is the enhanced access to universal and affordable health care through the availability of earmarked resources. Furthermore, the non-lapsable nature of this reserve ensures that unused funds are rolled over to the following fiscal year.
Significance of Spending on Healthcare
Investment in health care yields improved developmental outcomes. From an economical perspective, improved health status results in higher productivity and fewer losses tied to early retirement, premature death, or prolonged disability. This investment also results in job creation, mainly for women, as it expands the health workforce. Each extra year of life expectancy can raise GDP per capita by 4%.
About Health and Education Cess
The Health and Education Cess is a 4% charge introduced during the 2018 Budget speech by the Finance Minister alongside the announcement of the Ayushman Bharat Scheme. This cess, which replaced the existing 3% Education Cess, is aimed at addressing the health care and educational needs of rural Indian families.
Detailed Explanation of Cess
Cess, unlike regular taxes and duties, is imposed as an additional tax with the purpose of raising funds for specific tasks. It is added to the basic tax liability and constitutes part of the total tax paid. As per Article 270 of the Constitution, the funds collected through cess cannot be diverted for other purposes. The government continues to levy a particular cess until it gathers enough funds for its intended purpose.
The Distinction between Surcharge and Cess
While a surcharge is an added charge or tax on existing tax, cess is specifically meant for various purposes. Even though surcharges and cess are not shared with state governments, there’s a significant difference in their management. Surcharges are part of the Consolidated Fund of India (CFI) and can be used like other taxes, whereas cess funds must be kept separate after allocation to CFI and utilized only for a specific purpose. Unlike a cess that aims to raise funds for temporary necessity, a surcharge is typically permanent.
