Budget 2021: Healthcare gets biggest boost, but some expectations remain unmet

The year 2020 was like no other. The world was ravaged by a deadly virus which brought economies of the world to a standstill. The inadequacies of healthcare infrastructure were exposed. We struggled to deal with the pandemic and by the time effective measures were put in place, many lives were lost.

We have since braved the pandemic and are now faced with economic recovery. In this light, the nation had pinned all its hopes on the 2021 budget. Finance Minister Nirmala Sitharaman had her work cut out for her. Economic recovery featured as the main star of this year's budget.

From the impending COVID-19 vaccination drive to bettering existing healthcare infrastructure to supporting the healthcare/ pharma industry, the expectation was of increased government spending on healthcare from 1.2 per cent of the GDP to 2.5 per cent of the GDP. The public expected reduced out-of-pocket spends and the industry expected reduced taxes/import duties/ GST rationalisation/clearer regulation.

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Expectations were set high. FM Sitharaman's budget stood on 6 pillars. Health and well-being were pillar No. 1., and rightly so. At Rs 2,23,846 crores, the financial outlay towards healthcare saw a dramatic increase of 137% over last year's outlay.

Evidence is enough that the government has looked at the healthcare sector and is poised to make it more robust than ever.  

The allocation of Rs. 35,000 crore towards COVID-19 vaccination spends is demonstrative of the government's resolve to ensure that the Indian populace that has suffered this dreaded disease, suffers no more. The question that remains is how many Indians this outlay would be enough to vaccinate. The FM did say that she would give more. This was indeed a welcome step. That said, the budgetary allocation meets the expectations of the nation.  

Keeping with the focus on developing our healthcare infrastructure, the words of the FM - Progressively, as institutions absorb more, we shall commit more were just not mere words. The figures spoke for themselves. The allocation of Rs 64,180 crore for infrastructure development as part of the PM AtmaNirbhar Swasth Bharat Yojana is another welcome measure.

The decision to develop capacities of primary, secondary, and tertiary care health systems, strengthen existing national institutions, and create new institutions, to cater to detection and cure of new and emerging diseases was essentially the need of the hour.

This will help the development of our healthcare infrastructure - hospitals, labs, critical care centers, wellness centers, R&D labs and provide much-needed relief to these resources that have, because of COVID-19, been stretched beyond their limits of efficiencies.

The support given towards digitisation of health data will help in better data analytics, generation of data-based reports and will make the decision-making process for healthcare delivery systems more efficient and effective. Expectations in this regard seem to have been met.  

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Focused outlays on clean water, sanitation, and air have also added to the overall focus on the health and well-being of the public at large.   

While the budget has met expectations in terms of national vaccination and development of the healthcare sector, some expectations of the industry seem to have been overlooked. The industry was hoping for some relief in terms of reduced cess/ import duties (on medical devices), incentives for local manufacturing, rationalisation of GST slabs (though a function of the GST council), and tax rebates in general.

These have not been provided. That said, comfort may be drawn in the fact that no new obligations have been imposed in terms of direct taxes, thus some solace there. Regardless, GST issues can be dealt with by the GST council so all may not be lost just yet.  

The public had expectations that there would be measures to reduce out-of-pocket expenditure in terms of reduction in treatment rates, prices of drugs, and diagnostic tests. Sadly, they were given a miss. That said, these are all subject matter of legislative control and can be implemented under provisions of laws such as the Drugs Price Control Order 2013 and the like.

Solace can however be taken in the fact that the FM did not add any new direct taxes or additional levies on taxpayers. Commendation to be given on that front.  

An additional disappointment is the lack of attention to the telemedicine/e-pharmacy sector. There were hopes of some mention on this. That said, there is hope in that the government has already expressed its desire to make both of these mainstream by introducing the telemedicine guidelines and the e-pharmacy rules (which should be released soon hopefully).  

All in all, from a healthcare perspective, the budget has taken care of the bare necessities that are needed to ensure that the healthcare infrastructure of the country is given a booster dose to make it infallible to pandemics like what we are going through and also takes care of the actual vaccine that is needed to enable the public to fight this virus.  

Health seems to have taken centrestage, next only to defence. Pandemics are the new enemy and India needs to be prepared. Budget 2021 is a good enough step in this direction. Now time will tell how these steps eventually pan out.  

(The author is Partner, Pharmaceuticals, Life Sciences and Healthcare, Cyril Amarchand Mangaldas.)