Healthcare sector: Hits & misses from budget 2021

NEW DELHI: Healthcare has been at the center of all policy decisions since the pandemic has hit India.


India is among the countries with the lowest public healthcare budget in the world. The

public healthcare system

in the country, including that of the state and central government is close to 1.3% of GDP compared with the OECD countries’ average of 7.6% and other BRICS BRICS countries’ average of 3.6%.

While the total per capita government spending on healthcare has nearly doubled from Rs 1,008 per person in FY15 to Rs 1,944 in FY20, which comes to 15% CAGR, it is still considered low.

Here are some of the hits and misses from the

budget 2021

on the healthcare sector:
The hits

1) This budget 2021 increased the spending on healthcare by 137%. The increased spends on the healthcare sector through PM Atmanirbhar Swasth Bharat Yojana will improve infrastructure, and is in line with industry expectations of 2.5%-3% of the GDP, and also the GDP National Health Policy 2017 target of 2.5% by 2025.

2) India will spend Rs 2.23 lakh crore on healthcare. An amount of Rs 35,000 crore will be spent on Covid-19 vaccines as part of the Rs 2.23 lakh crore spending.

The finance minister also hinted on two new vaccines arriving soon. The new scheme called Pradhan Mantri Atmanirbhar Swasth Bharat Yojana with an outlay of INR 64,180 crore will be running alongside the

National Health Mission

.

Over the next six years, the new scheme will develop primary, secondary and tertiary healthcare systems, strengthen the national institutions and create new institutions for new and emerging diseases.

The commitment to increase healthcare outlay beyond Covid vaccine spends and no cess or additional taxes to fund the vaccine drive is an extremely positive one for the public healthcare and the economy. This will improve access to better healthcare facilities in the long run.

3) To boost the primary healthcare system, around 17,000 rural and 11,000 urban health and wellness centres will be set up. Integrated public health laboratories will be set up in districts, apart from 3,382 block public health units in 11 states.

There have also been suggestions around setting bio-safety laboratories and mobile hospitals locally.
Further, increasing allocation for the PLI scheme would attract more capital investment in the pharma sector, which is in line with the Atmanirbhar Bharat campaign to be self-reliant as an economy.

The misses
1) The reduction in GST on active pharmaceutical ingredients (API) from 18% to 12% to reverse the inverted duty structure, was expected. It was surely one of the misses.

2) The reduction of import duty on medical devices would have reduced the cost of healthcare services for citizens. However, there was no announcement on the same.

3) This budget could have brought much-needed relief to the citizens by providing rebates on medical insurance premiums and boosted pharma companies by incentivising research and development (R&D) spends. However, there were again no measures there.


(By Amit Kumar Bajaj, Partner, Grant Thornton Bharat. Views are personal)

Stay informed with the latest Business News on Times of India. Explore updates on International Business, gain insights with Financial Literacy tips, and make use of Financial Calculators. Don’t forget to check the list of Bank Holidays in 2025, including Bank Holidays in January.


Ready to Master Stock Valuation? ET’s Workshop is just around the corner!