Budget 2023: In the new normal, healthcare needs big boost; here's what Nirmala Sitharaman can do

The Indian healthcare industry started 2022 under the threat of the Covid-19 pandemic but went on to
achieve a landmark by administering 200 crore vaccine doses. The success against Covid-19 was the
cornerstone that enabled the recovery of the sector. The turnaround also boosted medical tourism which,
by the end of the year, had almost reached pre-pandemic levels.
 
The Union Budget 2022-23 earmarked Rs 86,200 crore for healthcare and was driven by increased
allocation to centrally sponsored public health schemes such as Pradhan Mantri Swasthya Suraksha
Yojana (PMSSY), Human Resources for Health and Medical Education, and PM Ayushman Bharat Health
Infrastructure Mission (PM-ABHIM) among others to continue building sustainable healthcare
infrastructure. The National Health Digital Ecosystem was a major announcement in last year’s Budget
although it could have been allocated more funds, while the National Tele Mental Health Programme
was a much-needed step to enable access to quality mental health counseling. The forthcoming Budget
is expected to focus on health infrastructure, and healthcare education and training.
 
Need to increase budgetary allocations

At just over 2 per cent of the GDP India’s public healthcare spending is woefully insufficient. We hope that in the upcoming budget, the allocation for public health will be substantially increased and eventually
reaches 2.5 per cent of GDP in line with the government’s intent to do so by 2025 with a focus on primary
healthcare to reduce India’s disease burden.
 
The Budget must also boost infrastructure in Tier II and Tier III towns and address the shortage of healthcare professionals. With just 0.6 doctors and 0.9 hospital beds per 1,000 people, accessing quality
and affordable healthcare remains a huge challenge.  The Budget can facilitate the Government and the private sector working in tandem to improve the quality of skilled healthcare professionals with a blueprint to identify healthcare professionals willing to work long-term in Tier 2/3 cities. It must also provide for doubling the number of doctors by replicating the fall/summer pattern adopted in foreign universities to double the number of seats in existing medical colleges.
 
Medical tourism
 
While India is a top draw for medical tourism, we need increased policy support to encourage medical
value travel (MVT) and develop it as an organized sector which would also boost the government’s Heal
in India initiative. Hopefully, the Budget will address this issue by enabling the creation of healthcare zones comprising hospitals, hotels, leisure, and fitness activities. The government may grant exemption from Income Tax for earnings from MVT, and facilitate visa on arrival for patients from high-priority countries, and rationalize medical visa fees.
 
Ease of doing business
 
The healthcare sector needs ease of doing business to eliminate deep disincentives for investments and
financing. The government needs to clarify the roles of state governments and the central government
on issues like product registration and approval jurisdictions. The process of application submissions and
tracking must also be simplified.  
 
To reduce the high cost of financing, the government may declare healthcare as a National Priority
Sector which will give banks the flexibility to lend to private healthcare institutions for longer tenures at
lower rates. The government should also reduce duty and cess for critical care and life-saving equipment
and drugs to reduce costs for both providers and patients. GST should be rationalized since healthcare
service providers are not eligible for input tax credits.
 
Screening and diagnostics programs
 
The Budget must facilitate a focus on screening and diagnostics programs to target a range of NCDs like
cancer and cardiac. These programs can be subsidised and implemented countrywide in
partnership with the private sector. It can increase tax exemption for preventive healthcare check-
up from the current Rs 5,000 to Rs 10,000 and include multiple family members and dependents, and
consider reimbursements of diagnostic services in outpatient settings as part of an insurance package.
 
We would also like the Government to build asset-light standalone models for out-of-hospital care,
remote monitoring and home care to reduce the burden on hospitals. The Budget must also focus on
skilling healthcare professionals which the private sector can help with its expertise, particularly in
medical technology.
 
Way forward

The healthcare industry is a sunrise sector that deserves the government’s undivided attention. The
sector is growing at a brisk pace but given the size of the country and its population the government
needs to do more. Undoubtedly, the country needs huge investments to meet the WHO’s recommendation of 44.5 skilled health workers per 10,000 people required for achieving Universal Health Coverage and Sustainable Development Goals. The Budget must facilitate such investments so that India can get closer to global standards in healthcare.

Views are personal. The author is MD and CEO Fortis Healthcare