Union Budget 2024-25: Will good intentions translate into optimal implementation this time?
Finance Minister Nirmala Seetharaman will likely have substantial news for the healthcare sector in the forthcoming Union 2024-25 budget due on July 23. The healthcare sector's pre-budget wish list is fairly predictable, restating demands of previous years
Taking cues from the measures announced in the interim Budget 2024, the strong health focus of the Bharatiya Janata’s (BJP) 2024 election manifesto (https://www.expresshealthcare.in/news/bjps-2024-manifesto-promises-expandedhealthcare-initiatives-focus-on-senior-citizens-and-transgender-community/443055/) and from President Droupadi Murmu’s address to the joint sitting of Parliament on June 27, it would be safe to say that healthcare is tipped to be one of the sectors to get a major boost in the first full budget of Modi 3.0.
Thus Finance Minister Nirmala Seetharaman will likely have substantial news for the healthcare sector in the forthcoming Union 2024-25 budget due on July 23. The healthcare sector’s pre-budget wish list is fairly predictable, restating demands of previous years, leading to the conclusion that either policymakers are not listening or do not have the fiscal means to grant these wishes. At least not to the extent that the sector desires. Let us consider the wish list from different segments of the sector.
On the healthcare delivery side, representing the private hospitals segment, Dr Ashutosh Raghuvanshi, MD and CEO, Fortis Healthcare lists shortage of skilled workforce, indirect taxation issues, and unused Minimum Alternate Tax (MAT) credit as the top challenges faced by the sector.
According to Dr Raghuvanshi, to ensure sustained and accelerated growth, the government must focus on policies conducive to private sector investment. The government should strengthen public-private partnerships (PPPs) by introducing new models and policies to boost the adoption of digital healthcare services and promote medical value travel. This can be achieved by facilitating international insurance recognition for Indian healthcare providers to attract more international patients.
From the diagnostic sector Ameera Shah, Executive Chairperson and Whole Time Director, Metropolis Healthcare also urges investing in training for doctors, nurses, and allied healthcare workers will further elevate the quality of care. On PPPs, she urges the new government to prioritise optimising PPP models to ensure high-quality, positive, and impactful outcomes, pointing out that increased funding for screening and diagnostic programs targeting Non-Communicable Diseases (NCDs) such as cancer and cardiac ailments is essential. Shah also points out that implementing a 0 per cent GST on diagnostic services and facilitating refunds for GST paid on input tax credits can reduce costs and improve accessibility. Lowering customs duty on imported diagnostic equipment and adjusting high GST rates on lab supplies will enhance efficiencies and foster R&D investments.
Reading between the lines, this underlines the fact that existing policies or PPP models are not as conducive to private sector investment and need to be optimised, or scrapped in favour of new policies/models. Coming to the manufacturing backend of the healthcare sector, MedTech manufacturers have benefitted from recent budgets in Modi 2.0, which have set aside funds for local manufacturing under the Atmanirbhar Bharat initiative.
While Rahul Cordeiro, CFO, of Wipro GE Healthcare, concedes that existing schemes like the National Medical Devices Policy 2023, Production Linked Incentive (PLI) Scheme, Promotion of Research, and Innovation in Pharma MedTech Sector (PRIP) Scheme will help India unlock its full potential, he alludes to “persisting headwinds that have long impacted the sector, import dependence being one.” He hopes the budget can answer some critical questions such as how can the pace of the Make in India initiative be accelerated by prioritising sourcing domestically manufactured medtech. The second question Cordeiro poses is, can rebates to private healthcare providers buying local equipment, especially in underserved areas, incentivise wider adoption, and thirdly, how can local R&D be boosted through Innovation Linked Incentive schemes on the lines of PLI for manufacturing.
Similarly, Ganesh P Sabat, CEO, Sahajanand Medical Technologies, urges the government to continue its focus on accelerating medtech infrastructure, R&D, skill development, and sustainability along with higher allocation to healthcare spending that will give a strong impetus to healthtech. He hopes for a substantial increase in the overall health budget to at least 3 per cent of GDP to address existing gaps that will ensure strengthening of the proposed Ayushman Bharat scheme expansion, timely payouts to hospitals and industry so that patients are not devoid of innovative and latest state-of-the-art medtech devices, bringing to reality not only the ‘AtmanirbharBharat’ clarion call but also the “availability, accessibility and affordability” vision of Prime Minister Modi as we move towards a ‘ViksitBharat’.” Sabat touches on a very important sore point: the timely payouts to hospitals, which has been one of the key stumbling blocks in PPPs and schemes like the Ayushman Bharat mission. As the BJP’s 2024 manifesto promised an expansion of the Ayushman Bharat scheme, we are sure to see more outlay but will good intentions translate into optimal implementation this time?
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