Budget 2021

Healthcare Sector

There are a lot of things that people wait for with baited breaths, but nothing in that list impacts their lives as much as the Union budget. There are generally always key focus areas that the budget presents every year and this year was no different, yet was historic. A sector that had never garnered enough focus was at the center-stage this year around- Healthcare has been at the center of all policy decisions due to the unprecedented medical crisis brought about by the ongoing pandemic. Dr. Prathap C Reddy, Chairman of the Apollo Hospitals Group, hailed this new outlook by the Government as “ground-breaking” and is optimistic that it will “fuel job creation and boost economic momentum”.

India has always been among countries that have the lowest healthcare budgets in the world. GDP percentages of Healthcare systems in India have consistently been below average and below recommended international guidelines by enormous margins. India’s healthcare sector only contributes to 1.3% of its GDP while the OECD countries have an average of 7.6% and even BRICS countries average of 3.6%. Even though the per capita government spending has almost doubled from Rs 1008 per person in FY15 to Rs.1944 in FY20 it’s a still low CAGR of 15%. Globally, Indians have the highest Out of Pocket Expenditure on healthcare.  

This year however there have been a shift in the outlook albeit triggered by the prolonged pandemic. There have been a few hits along with a few misses:

  • The Government has announced a total outlay of Rs.2,23,846 Cr for health and wellbeing which amounts to a 137% rise from the previous year. Budget conveyed that healthcare is a priority for the government.
  • Several schemes like the PM Atmanirbhar Swasth Bharath Yojana scheme has been announced, and they have an outlay of Rs 64180 crore that will be run along with the National Health Mission.
  • The PM Jan Arogya Yojana (AB-PMJAY) are also a part of the increased healthcare budget. Every year close to 5 crore families are pushed below the poverty line just to bear healthcare expenses. This Yojana aims at providing healthcare cover of up to 5 Lakhs per family per year.
  • A sum of 2.23 lakh crore is set to be spent on health care, of which 35000 crores is to be spent on COVID-19 vaccines alone.
  • The budget aims at boosting primary healthcare as well. The focus this time is not limited to rural development but it also looks at urban areas with plans of 17000 and 11000 health and wellness centers in the rural and urban areas respectively. Integrated public health laboratories and public health units are in plans of set up.

Amongst all the upsides and promises for a better tomorrow, there have been a few questions and expectations unanswered and unaddressed.

  • The primary need of the hour, the reason the pandemic caught us all off guard is the fact that R&D is not focused on enough. No schemes have been announced to increase R&D in government institutes, neither has R&D spending in private pharmaceuticals been incentivized in any way.
  • Advanced medicals devices are primarily imported into the country, no reduction in import duties have been announced.
  • The GST on Active Pharmaceutical Ingredient (API) is at the higher slab of 18%. This results in higher prices of the final product. Even though the reduction to 12% was anticipated and expected, the budget however did not reflect the same.

Nevertheless, despite all the shortcomings, the budget has been revolutionary in many ways. It reflects the changing mindset of the country where healthcare is steadily coming to the forefront. The COVID 19 provided the necessary impetus to focus on public health and the overall healthcare system. While it is evident that the steps are not enough to meet the colossal demand of healthcare and also meet the necessary OECD guidelines and other global standards, we still do have a long way to go.  This is year’s Budget comes as a welcome change in the right direction, in a country where healthcare has always taken the backseat. The pandemic seems to have caused a paradigm shift in  not only India but all over the globe.

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