Union Budget 2024: Will FM Sitharaman increase fund allocation to health sector?

Budget expectations: The budget for the year is anticipated to focus on key areas such as affordability, accessibility, and healthcare quality within the healthcare sector. The Indian healthcare industry holds great expectations for the forthcoming Budget of 2024.

According to data, there has been a consistent decrease in health expenditure relative to both the budget and GDP from 2018-19 to 2023-24. This decline becomes more pronounced when accounting for inflation. In real terms, the expenditure has only marginally increased since 2019-20. The proportion of the total budget dedicated to health has reduced from 2.4% in 2018-19 to a mere 1.9% in 2023-24. Similarly, the percentage of GDP allocated to health has dropped from 0.30% to 0.28% during the same period, as reported by the Times of India. 

Various stakeholders within the sector are advocating for an increase in budget allocation for healthcare. Such an increase would have a significant impact on public health initiatives, infrastructure development, and resources dedicated to medical research. There is a prevailing anticipation of the introduction of tax incentives, which may involve tax relief for healthcare providers or insurance companies aimed at enhancing affordability within the healthcare system.

Dr Harsh Mahajan, Chair of FICCI Health Services Committee, said the government should fulfil its 'promise' of spending 2.5 per cent of GDP on the healthcare sector.

Mahajan told news agency ANI, "We would want the government fulfils its promise of spending 2.5 per cent of GDP on the healthcare sector as was promised many years ago. One has to realize that the healthcare sector also apart from taking care of the health of the public also provides many jobs. So, increasing the investment into healthcare by the government would lead to not only a healthier society but also help in achieving the target of becoming a five trillion economy."

“The Union Budget 2024-25 is a pivotal moment for India's healthcare sector. Building on the ₹64,180 crores allocated in 2023-24 under the Pradhan Mantri Atmanirbhar Swasth Bharat Yojana, we need enhanced tax incentives and financial support for healthcare startups to catalyze innovation. Significant investments in digital health infrastructure, particularly AI, will improve patient outcomes and operational efficiency,” says Dr Sravani Reddy G, Founder & CEO, Soprav Healthcare Consulting.

“The healthcare sector in India is on the brink of excellence. There is an increased focus on treating unique patient cases, robotic surgeries, and increasing prominence of AI for accurate diagnosis. To reach the next phase, emphasis must be laid on innovation, research & development, and infrastructure development. These are the foundations for India’s health sector to achieve an international standard of treatment for all,” hopes Joseph Pasangha, Group COO, SPARSH Hospital, Bengaluru.

Anubha Taneja Mukherjee, Member Secretary, Thalassemia Patients Advocacy Group said, "As of now, only a few iron chelators, Deferoxamine and Deferiprone, for thalassemia patients currently fall under the 5 per cent GST slab. Even though we are incredibly grateful for a reduced GST slab on these drugs, the reduced GST slab is not considerably benefiting Thalassemia patients as there are other life-saving drugs and equipment that are needed lifelong by Thalassemia patients. These fall under a higher GST slab of 12 per cent."

She further said: "The recent introduction of the new tax regime has taken away the relative advantage of additional tax relief provided under Section 80U for Persons with Disability (PwD), including Thalassemia, which incur exorbitant expenditure on their treatment and are at a disadvantage in society concerning opportunities. We wish to draw attention to the need for a GST reduction or waiver as appropriate on the below-mentioned life-saving drugs and equipment related to thalassemia treatment, such that the cost of treatment is kept at a minimum."