With the country continuing to grapple with the ever-changing variants of COVID, the Union Budget, presented in Parliament on February 1, 2021, by Ms. Nirmala Sitharaman, the finance minister, was expected to offer a substantial rise in respect of allocation of funds to the healthcare sector. However, the government proposal to spend ~ INR 86,606 crores on the health sector in FY 2022-23 is a negligible increase from the revised estimate of INR 85,915 crores in FY 2021-22, viewed with concern by health experts.
The finance minister clarified that more than 350 exemption entries are proposed to be gradually phased out from customs duty. These include exemption from customs duty on certain agricultural produce, chemicals, fabrics, medical devices, and drugs and medicines for which domestic capacity is sufficient. Further, as a simplification measure, several concessional rates will be incorporated in the Customs Tariff Schedule instead of prescribing them through various notifications. The finance minister also stated that the government would promote thematic funds for blended finance to encourage important sunrise sectors such as Climate Action, Deep-Tech, Digital Economy, Pharma, and Agri-Tech. However, the government’s share is limited to 20%, and private fund managers manage the funds.
The Budget has focused on the deteriorating mental health in people of all ages, acknowledging that the pandemic has accentuated mental health problems in the country. Consequently, to improve access to quality mental health counselling and care services, the government proposes to launch a ‘National Tele Mental Health Programme’. The program will include a network of 23 tele-mental health centers of excellence, with the National Institute of Mental Health and Neurosciences as the nodal center. The International Institute of Information Technology-Bangalore (IIITB) will provide technology support.
Lastly, the finance minister introduced the ‘Ayushman Bharat Digital Mission’, whereby the government will provide an open platform for the ‘National Digital Health Ecosystem’. The forum will consist of digital registries of health providers and facilities, unique health identity, consent framework, and universal access to health facilities. This, however, is seen as missing the wood for the trees as it fails to take into account the digital divide between urban and rural areas.
From the perspective of healthcare and pharmaceutical sectors, while the stakeholders have lauded the recognition given to mental health problems and appreciated the due impetus given to tech-enabled access to healthcare, they have also expressed dissatisfaction with the Budget’s neglect in establishing healthcare as a priority sector. The life sciences and healthcare industries in India have expressed disappointment with the Budget due to the lack of coverage concerning;
• New health infra initiatives, other than the creation of a digital health system and tele-mental health infrastructure;
• Medical device parks and the shortcomings in resolving the country’s high dependency on the import of medical devices. In this regard, the stakeholders believe that more medical devices parks should be built across the country to establish a robust and cost-effective ecosystem for the nation’s medical device industry;
• Need to increase the healthcare expenditure to at least 2.5-3% of the GDP to address, amongst others, the crisis of comorbidities, given that people with comorbidities are the ones that constituted a large segment of individuals that succumbed to the pandemic;
• Concessions in Manufacturing of APIs (Application Programming Interface);
• Graded increase of Customs Duty (of medical devices) to 10-15 % from the current 0-7.5 %, and reduced GST in respect of the same; and
• Tax Breaks and Incentives for (private) healthcare infrastructure creation in tier 3, tier 4 towns and villages.
Further, it is evident that most announcements in the Budget about the health infrastructure continue to remain on paper or are in the primary stages of implementation. Over the past two years, the pandemic and its trajectory have increased the importance of preventive healthcare, supporting the wisdom of the age-old saying – “prevention is better than cure.”
The government’s short-term priorities are reflected in its Budget allocations, indicating that the healthcare sector has been given a backseat. To illustrate this disappointing trajectory, take the spending on defence that has increased by INR 16,952 crores (from INR 3,68,418 crores to INR 3,85,370 crores) against the health sector, which has only a marginal increase of INR 691 crores (from INR 86,606 crores to INR 85,915 crores). It is, therefore, apparent that a radical change in direction is required to reprioritize expenditure in health and allied services and, in so doing, resolve the problem of inequality. Given India’s aim to become self-reliant in healthcare, the need of the hour is to ensure a big push for the health sector in the Budget’s allocation of funds and provide tax incentives for stakeholders engaged in the pharma and healthcare industry. Such salutary measures are vital to make quality healthcare accessible and affordable to all, especially with the life-changing crisis that Covid has brought to health management.
The author Sidharrth Shankar is a Partner, was assisted by Vidur Prabhakar who is an Associate with JSA, Advocates and Solicitors. The views expressed are personal and not of the firm.