June 11, 2021
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Budget 2021

Lessons From Covid-19: Healthcare Sector Needs A Budget Boost

Keeping in view the contribution of the healthcare sector towards controlling the pandemic, the Budget allocation should be more than previous year’s Rs 69,000 crore

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Lessons From Covid-19: Healthcare Sector Needs A Budget Boost
Finance Minister Nirmala Sitharaman
Lessons From Covid-19: Healthcare Sector Needs A Budget Boost

The Covid-19 pandemic has taught the entire world the importance of having a strong healthcare sector. Now that the sector’s contribution is well known throughout 2020, it is possible that the long-term trend of low government spending on healthcare may show a reverse in the 2021 Union budget.

The imminent Budget has to examine the challenges of the unparalleled pandemic and make allocations accordingly to meet the new and renewed demands of the health sector. This is necessary as we all learn to embrace the “new way of living” – one that makes the healthcare sector strong and more self-reliant.

While the pandemic certainly put an immense amount of pressure on the crumbling public healthcare systems, limited diagnostic capacities and restricted manpower, it also made the government realise the importance of PPPs and local manufacturers.

So, to begin with, one of the primary expectations of this year’s Budget is that there should be a bigger focus on public spending on healthcare. India’s total healthcare spending as per OECD is way lower than that of other countries. The pandemic has urgently brought to the fore the need for good public hospitals. We need more public-private partnerships, and further investments to strengthen indigenous manufacturing of medical devices, personal protective equipment (PPE), and raw material for drugs.

It is also more important than ever now to provide greater investment for preparedness against other health emergencies that may arise in the future, by buttressing diagnostic testing capacities and contact-tracing mechanisms.

We need more collaborative effort between private sector players and members of the academia, scientific experts, and governments to strengthen R&D in drug discovery. Necessary incentives should be brought in to develop such partnerships and make them meaningful for the stakeholders.

Besides, public awareness programmes and high skill training is essential to improve the country’s public healthcare systems. The requirement now is for consistent budgets to be apportioned for its sustained success. While India is one of the youngest nations with over 60 per cent of the population under the age of 35 years, the disease burden in the country is quite severe.

Meanwhile, the private healthcare sector has suffered major losses along with all other sectors during this turbulent period and requisite efforts are a must for its revival. The government needs to rationalise medical costs by reducing taxes on healthcare and treatment. For starters, what could be done immediately in this budget is bringing in an increase in the amount of tax relief under Section 80D, 80DD, 80DDB and 80U.

On the GST front, the government can consider making healthcare more affordable by taking an immediate step of making “zero-rating” of GST for healthcare services. This will offer two-pronged benefits -- keeping the credit chain intact and ensuring that tax is not added to the cost of healthcare services.

India also sadly lags behind in hospital beds required for its population. So, the private sector requires higher tax incentives towards modernizing medical facilities which will go a long way in ensuring better healthcare, more investments and in turn generating more employment.

The Budget should also have enough focus on more spend on expanding medical capacities and modernising digital infrastructure to support medical data storage, management etc. Additionally, more funds should be allocated for medical research and development to aid drug discovery.

During this time, India has spent a lot of resources on vaccine research and should take the lead globally in vaccines and improve foreign exchange vis-à-vis this. Just as diagnostics and drugs have received clearance in the fast track to managing Covid-19, this should become a norm for other vaccines as well. There should be a special budget for newer vaccines.

In last year’s Budget, the Centre had allocated Rs 69,000 crore towards the healthcare sector. While it may have been an increase from the previous budget, experts had recommended the government to increase its budget allocation. Moreover, Budget 2020-21 had left many from the medical fraternity disappointed.

However, this year has been a different and highly challenging one for the healthcare sector. Private as well as public health sectors have worked tirelessly through the pandemic to provide the best of services, it is now only reasonable to hope that Budget 2021 will come with some positive news to give the sector a major boost.

(The author is director Medical-Bhatia Hospital, Mumbai)

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