Healthcare is a GDP accelerator and Budget 2024-25 should provide for exponential reform

India’s Budget 2024-25 comes on the back of a changed political environment in India however India’s growth story and potential in a world reeling under economic pressure remains more optimistic than ever. This is an opportune time for India to strike a balance between capital conservation and undertaking some aggressive reforms. The government has already indicated that the forthcoming budget would be aimed at sustaining the current economic growth trajectory of India. Countries aiming for self-sufficiency by driving domestic manufacturing as well as consumption would be the ones to float through swiftly in this much-anticipated economic turmoil.

India’s healthcare needs a reform approach to pivot change and drive the sector as a core agenda for the future of the country

And it goes without saying that a greater fiscal injection into the sector will be massively impactful. The 2023-24 allocation of Rs 79221 crores represented a drop from the 2022-23 allocation of Rs 86175 crores. In the interim budget of Feb 2024, the FM earmarked an allocation of Rs 90171 crores. So over the last 3 years, there has been no indication that healthcare is core to the government’s reform agenda for India through this overarching allocation in the budget. India’s public healthcare spending is still far below the target of 2.5 per cent of the GDP. With each passing year not meeting that target pushes back long-term healthcare goals for the country. 

Public and private healthcare partnerships are the way to go

Changes in the outlook on health and prioritising the sector through stimulus, more organised policy, enabling speedier adoption of digital tools and services, expanding the Ayushman Bharat Digital Mission, and using its last mile reach to enable rural healthcare push must be expedited. The focus must be on transformation and not simply cosmetic changes applied to gaps in the system. Importance must be given to the transformation of public infrastructure, upgrading medical colleges, and investing in rural healthcare. Financial commitment must reach the public healthcare systems both at the metro cities and rural levels.

Bolstering medical education

A lot has been done to drive impetus to medical education which has resulted in the approval of 157 new medical colleges, however, there is a lack of teaching faculty in most of these colleges.  There needs to be another policy change of bringing in a public-private partnership thought process where clinicians from private healthcare systems can take academic positions in medical colleges. The government needs to provide a much higher impetus to the private sector by giving tax incentives in setting up healthcare infrastructure and adding hospital beds in tier 2-3 cities across the country to help reduce the demand-supply gap of healthcare in emerging India.

Supporting indigenous medical technology manufacturing

The sector needs an extremely robust and highly incentivised policy for domestic manufacturing of medical technology and consumables. Currently, India is importing Rs. 63,200 crore of medical devices and is over 80 per cent dependent on imports. India needs self-reliance in this area which is largely dependent on imports.  There needs to be continued support in terms of tax reforms for Research and Development in the medical technologies sector. Healthcare is a GDP accelerator and budget 2024-25 should provide for exponential reform to the sector so it supports this objective.