Budget wishlists calls for more funds, better policies

The Reserve Bank’s annual publication “State Finances: A Study of Budgets” reveals that while the states’ expenditure on medical and public health, family welfare and water supply and sanitation has increased over the years, it has not moved much in terms of per cent of aggregate expenditure.

States and UTs collectively spent Rs 3,54,548.6 crore in 2022-23, Rs 4,81,831.9 crore in 2023-24 Revised Estimate (RE) and Rs 5,03,267.8 crore in 2024-25 Budget Estimate (BE) on medical and public health, family welfare and water supply and sanitation. However these huge sums translate to just 1.8 per cent, 2 per cent and 1.9 per cent respectively as a per cent of GDP

Expenditure on medical and public health and family welfare, as per cent of aggregate expenditure ranged from 5.6 per cent in 2020-21, rising to 5.9 per cent in 2021-22, dipping to 5.4 per cent in 2022-23, with a marginal rise to 5.6 per cent in 2023-24 (RE) and 5.6 per cent in 2024-25 (BE).

Given these statistics, it seems justified that this year’s pre budget discussions between healthcare industry stalwarts and Finance Minister Nirmala Sitharaman are once again about increasing allocation to healthcare to over 2.5 per cent of of GDP. This has been a persistent demand, but allocation has not come near this figure so far.

While these are industry recommendations, what should citizens of India expect from such allocation of tax payer money? More affordable and accessible healthcare facilities? The deaths of patients in Gujarat, after unnecessary angioplasties post health camps under the Pradhan Mantri Jan Arogya Yojana (PMJAY) scheme, prove that monitoring the efficient use of funds is as crucial as allocating funding for such schemes.

Gujarat’s health ministry has since debarred five private hospitals and suspended some of the doctors involved in organising these health camps, but this could be only the tip of the iceberg, not just in Gujarat but other states as well. The state’s investigations revealed “irregularities” like modified lab reports to claim benefits under the PMJAY.

Perhaps the tragic deaths in Gujarat and the investigations that followed will encourage a deeper dive into how PMJAY and other public health schemes are monitored and result in more efficient management of public health funding. Hopefully directives in the Union Budget for the 2025-26 financial year will address these concerns.

Industry associations have aired their wish lists of long standing demands, and many of them touch on these points. For instance, NATHEALTH’s recommendations include making insurance reimbursement rates more viable, by indexing reimbursement rates under schemes such as CGHS, PMJAY, and ECHS to the Consumer Price Index (CPI) to ensure financial viability, given that many rates have remained unchanged for nearly a decade.

While making reimbursement rates more attractive might prevent or at least reduce future frauds, the government has to find the means to fund such strategies. Another of NATHEALTH’s recommendations calls for redirecting public health revenues, by allocating proceeds from healthcare CESS and the proposed 35 per cent GST slab on tobacco and sugar products to strengthen public health programmes and advocates for a unified 5 per cent GST on all healthcare goods and services to reduce input costs.

The insurance sector is hoping that GST on health insurance premiums will be reduced or completely cut. This will make health insurance more affordable and hopefully help citizens meet the increasing costs of healthcare.

Industry is also asking for stronger policies. On the diagnostics side, Ameera Shah, Promoter and Executive Chairperson, Metropolis Healthcare urges the government to implement a robust policy framework that standardises practices and mandates NABL accreditation for every laboratory operating in India. She also advocates for the introduction of 0 per cent GST on diagnostic services and refunds for GST paid on inputs. Additionally, increasing incentives for research and development in diagnostic technology will foster innovation and position India as a global leader in healthcare advancements. Other key measures include raising the tax exemption for preventive health check-ups from the current Rs 5,000 to Rs 10,000, extending this benefit to multiple family members, and incorporating reimbursements for outpatient diagnostic services within insurance packages. Simplifying regulatory processes and introducing a single-window clearance system will also improve the sector’s business environment, as per Shah.

On the medical devices side, Himanshu Baid, Managing Director, Poly Medicure suggests that the government can consider standardising the GST rate of 12 per cent across all medical devices as it would simplify the tax structure, ensuring consistency and ease of doing business. Enhancing export incentives under RoDTEP to 2-2.5 per cent—from the current range of 0.6-0.9 per cent—will bolster the global competitiveness of Indian-made medical devices, enabling manufacturers to expand their reach in international markets.

Baid also advocates for implementing a policy that curtails the reuse of single-use medical devices, ensuring patient safety, minimising healthcare-associated risks, and maintaining high-quality standards across the industry. Additionally, extending the Production Linked Incentive (PLI) scheme by 2-3 years would support local manufacturers in scaling production, reducing import dependence, and achieving long-term growth and sustainability.

While budget recommendations will keep rolling in, it’s anyone’s guess on how many of them will actually be considered viable by the Finance Minister. The government will have to carefully craft policy changes and funding, to serve patients’ needs and address industry concerns more efficiently.

VIVEKA ROYCHOWDHURY, Editor 

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