A new India has to be built on the foundation of a healthy India. Countries around the globe have kept healthcare at the core of their economic development. The socio-economic benefit of a strong healthcare sector not only translates into the creation of a healthy and more productive community but is also one of the world’s largest and fastest growing sectors. WHO estimates that the healthcare sector is one of the largest employment generators globally. India has, for too long, ignored the value-creation opportunity of this sector and needs a paradigm shift to bring it to the forefront of the country’s development. Among developing nations, India has one of the poorest development indices, usually the social indicators of any country. With a new government in place under the leadership of a dynamic and a visionary Prime Minister, the expectations of the healthcare sector were high. The question is has Budget 2015 delivered to the healthcare agenda of India?
India has the world’s highest population growth rate: WHO, in its ranking of healthcare systems, placed India at a dismal 112th out of 190 countries studied. This is corroborated by the fact that India spends just 4.2 per cent of its GDP on healthcare, of which the public health spending is a mere 1.2 per cent, compared to 3 per cent in China and 8.3 per cent in the US. India needs to add 1.7 million beds, double its medical manpower and increase its paramedical manpower three-fold to match WHO standards. It becomes imperative to create an environment conducive to facilitate infrastructure creation and increase investments across the healthcare ecosystem.
This Budget was expected to provide the much-needed impetus to the sector. Unfortunately, it does not deliver to the expected transformation of the healthcare sector in the country under the much-hyped promise of universal healthcare coverage or the Make in India initiative. The allocation of Rs 331.5 billion for the sector is similar to the outlay in previous budgets and does not translate into the much-anticipated increase from 1.2 per cent of GDP spend to 2 per cent by the government, which has been the direction set by it in the draft national healthcare policy. The Budget was expected to deliver infrastructure status to the sector, but that too was given a miss. Although the opportunity of extending tax-free infra bonds to healthcare infrastructure beyond roads and railways was there, the finance minister chose not to include it. Under the Make in India programme, the government was expected to encourage indigenous production of medical equipment and devices through the exemption of indigenous manufacturers from excise duty for products produced or assembled in India, wherein the value of imported raw material does not exceed 50 per cent of the equipment cost. Income tax/ MAT exemption of 15 years for locally manufactured medical technology products to promote Make in India was also expected. The Budget is silent on this front, and this takes away the opportunity of kickstarting growth of the domestic medical technology sector.
The silver linings are the announcement of the setting up of five AIIMS in Tamil Nadu, J&K, Punjab, Himachal Pradesh and Assam and a fillip to the health insurance sector through higher exemption limit. One is hopeful that the tax exemption provided under the Swachh Bharat campaign will help accelerate sanitation projects, which should lead to the control of infectious diseases.
While the Budget focuses on changing the tax regime, kickstarting infrastructure and sharing more with states for their development, it leaves a lot to be done in terms of focus on healthcare for a new India.
The author is Chairman & co-founder, Medwell Ventures
(This story was published in BW | Businessworld Issue Dated 23-03-2015)
