Indian health sector, through the prism of Union Budget 2016
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Indian health sector, through the prism of Union Budget 2016

Indian health sector is an ignored child & needs much more care, as long as its relation with Union Budget 2016 is concerned

 

The government of India has announced $4.81 billion or 297 billion rupees in the union budget allocation (2016), which is roughly 2 per cent more than its previous financial year for its health sector. Experts comment it as the ‘tight leash’. The union government has asked the state government to contribute more funds to the health programs which is one of the most important programs for the country.

The 2016 Union Budget has allotted $4.81 billion i.e. 297 billion rupees for this sector. The amount is just 2 % higher than the previous government’s revised & last financial budget. Prime Minister Modi’s vow to achieve the goal of revamping health sector and succeed in universal health coverage does not find the match with this paltry 2 % increase for fulfilling the commitment of making medical services reachable to the poor.

The fallacy of the dream project

As per the allocations of this year’s budget, health sector is not adequately allocated in the budget. Until health is prioritized, the promise of universal health will remain far away from reality, as commented by the Public Health Foundation of India’s President, K.Srinath Reddy, while talking to the Reuters.

The comparative budgetary provisions in USA & China

USA spends 8.3 per cent of its budgetary provision for the health sector; China spends 3 per cent of its GDP while India spends merely 1 per cent of its GDP. Of course all the individual Indian states have their own budgetary provisions for their health sectors.

The paltry situation

During the last 2 decades, India has been shining with its economic growth, but all the successive governments could not be generous to the health sectors in their budget allocations. The fuels to the fire are bureaucratic bungling, Public hospitals’ poor networks and inadequate number of doctors for millions of poor strata of people.

Over and above, the states have been asked to contribute to the national Health Mission. In spite of these foul weathers, the government is planning to open 6 new AIIMS (the large public hospitals) across the country. But the financing of these hospitals are not under the ambit of sufficient funds. The total costs are budgeted within the cost of Rs. 33,150 crores. Even the health ministry officials are very much disappointed with the “discouraging” budgetary allocation to this important health department.

Synopsis of health sector & its connected departments’ budget allotment

The budget allocation for the financial year 2016 & 2016 are 332,162 crore for health & its related sectors. If compared with last year’s budget (351.63 billion rupees) this year’s budget allocation for this health sector is a bit less, but the tax deduction in the premium of health insurance is changed as the accessibility and affordability of the individuals which are aimed at boosting health insurance schemes in the country.

The criteria’s are listed here below:

a) Deductions from health insurance has been hiked to 25,000 rupees, it was 15,000 rupees in the last budget. The senior citizen will get 30,000 rupees benefit from tax deduction; the figure was Rs. 10,000 in the outgone year.

b) Serious diseases of the senior citizen will get the deduction limit of 80,000 rupees. The last year it was less 20,000 i.e.60, 000 rupees.

c) Senior citizens who are living below the poverty lines will be benefitted from the physical aids.

d) Senior citizens who are not covered by the health insurance will be benefitted from Rs. 30,000 deduction as their medical expenses which were earlier Rs. 20,000.

e) In case of accidental death, the deceased family will get cover from the Pradhan Mantri Jeevan Jyoti Yojana. For that Rs. 330 has been fixed as the premium.

f) One more insurance scheme to be launched in this budgeted year is the accident insurance of 2 lakh. And the premium for that will be only 12 rupees per year. The name of the scheme is Pradhan Mantri Suraksha Yojana.

All these are the pointers to the better health services for the people in the country.

New AIIMS (national health care centres) in 5 states:-

The states as Tamil Nadu, J&K, Punjab, Himachal, Assam and Bihar will have AIIIMS, (Al India Institutes of Medical Sciences) at the cost of Rs. 33,150 crores.

Disappointments in the Pharma Industry

The budget 2016 has disappointed the entire pharmaceutical industry.

Shining sides of the budget

1) AIIMS in five new states, Tamil Nadu, J&K, Punjab, Himachal, Assam and Bihar.

2) Maharashtra, Rajasthan and Chattisgarh will get one each new National Institute of Pharmaceuticals Education and Research, which is AIIMS like Health care Institute and Research Centre.

3) Nagaland and Orissa will get one each Institute of Science and Education Research in this budgeted year.

Prospects ahead (other than budgeted provisions)

A) Severe shortages of skilled health staff and doctors are expected to be addressed to.

B) The growth prospect of Indian Pharmaceutical market is expected to reach US$ 55 billion by the time the term of this present government will be over i.e. 2019-20. As per the prediction of McKinsey, the industry has the growth prospect of doubling itself within 6 years. At this moment it is US$ 24 billion and by 2020 it is optimised to be US$ 55. A report, outlined by CARE, suggested that the Pharma sector expects incentives for boosting domestic innovations in the fields of medical equipment. It can be possible if income tax is written off by 250 per cent towards the R & D expenses. This should be in addition to the medical technology park creations.

C) Boosting health insurances are also the prospective objectives of the health sector.

D) Enhanced tax incentives for the R & D activities are one of the expectations of the pharmaceutical industry.

E) The commerce ministry has bagged 400 per cent of boost in their R & D activities.

F) The big players in the Pharma industry were hoping that budget will provide them enough opportunity for changing in the patent laws and manufacturing genetic drugs for their companies. Further to it, the industry is fathoming high expectations of manufacturing bulk drugs as a boost to the bulk drugs manufacturing sector. For doing so, the industry expects that the import duty of basic drugs is at present 5 per cent, and be raised to 7.5 per cent, which can boost up exports. (As on date basic drugs are imported from China).  Incentives to pharma & medical research were also some of the high expectations of the industry.

G) As far as weighted deductions are concerned, the budget was expected to increase the deduction from current 200 per cent (under section 35 (2AB)) to 250 per cent.

H) The budget has been highly lauded for correcting inverted duty structure and also for pushing ahead the “Make in India” slogan. But this is a big challenge for the pharmaceutical industries in India. As on date, India imports raw material on cheap rates from China.

I) Secretary General of the Indian Pharmaceutical Alliance (IPA), Mr. D.G. Shah, views that correction of the inverted structure is a right move, but its impacts on the Pharmaceutical industry is yet to be seen in practice. Under active pharmaceutical ingredients (API) movement, the union Government is upbeat to encourage raw materials manufacturing. But in case the raw material duty is brought down to a great extent, the new manufacturing prospect under Indian Pharmaceutical Alliance will get a bang for producing the raw materials in the domestic market.

However, no direct benefit has been offered to pharmaceutical industry in this budget, although there are some positive lining in the health sector.

The middle class—the budget—and the health sector

The middle class has been given different types of incentives towards their net disposable income, which may result in more investments towards health sector. Chairman and Managing Director of Biocon, Kiran Mazumdar-Shaw views the budget as not mere directional rather it is destination focussed.

Pharmaceutical Industry’s hits & misses

Hits: - i) Health covers have been extended by initiating the health insurances. By this way ‘out of pocket spending’ can be reduced.

ii) As the government has linked the “Swatch Bharat Abhijan” to hygiene and the allocation in the budget is in the tune of Rs. 33,150 crore for setting up 5 AIIMS in 5 states, the union health ministry is sure to harvest its fruit in the next financial year. It is believed that these states will have quantum jumps. Even the neighbouring states will also have its benefits. According to Mr. J P Nadda, the Union Health Minister, the ministry is up in to its toes in implementing these schemes within a shortest possible time.

The minister is also in the view that the focus on “Swatch Bharat Abhijan” is going to flatter an overall health awareness program throughout the country. The minister termed the budget as progressive, pragmatic, balanced and pro-people. He is optimistic that the budgets will bring in all-round social and economic growth because of its outcome orientation and inclusiveness.

Joint Managing Director, Apollo Hospitals Enterprise, Sangita Reddy is in the opinion that although the budgetary allocation’s percentage is not increased, the EPF fund has been enabled by the budget, which is a good sign for the health care through the budgetary provision.

Other than this, universal health coverage and health insurance has got the strategic and unique boosts through this budget

Misses: - 1) R & D could have been encouraged at least to some extent. No R & D support in the           Pharmaceutical industry has been envisaged in this budget.

2) No extension of reduction in minimum alternate tax (MAT) has been done for R & D.

 

3) Education cess, like health cess, could have been initiated. This is noticed as the big missed opportunity, because health sector is suffering from funds provisions.

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