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Budget 2017: What it means for the healthcare sector

The Union Budget 2017 has directionally sent some of the right signals; but some issues remain unaddressed

Deloitte
Published: 06, Feb 2017

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(Image: Shutterstock - for illustrative purposes only)
(Image: Shutterstock - for illustrative purposes only)

The healthcare sector in the country has been plagued by low and stagnant government spending and high out of pocket expenditure. The concerns have been around meeting the challenges of the dual burden of communicable and non-communicable disease while making healthcare affordable and accessible for all.  The healthcare providers, medical devices and pharma industry have been seeking changes in some regulations, tax and duty structures and there has been a clamor for initiatives to boost the health insurance cover for the Indian population.

The Union Budget 2017 has directionally sent some of the right signals; but some issues remain unaddressed:

The overall health budget has increased from INR 39,879 crore (1.97% of total Union Budget) to INR 48,878 crore (2.27% of total Union Budget). While the increase is welcome, most of it is concentrated towards human resources and medical education.

Finance Minister has announced a positive step to harmonise policies and rules for the medical devices industry to encourage local manufacturing and move towards improving affordability for patients, though no specific announcement was made on changing the import duty structure in this sector.

In addition, government has announced that it will be modifying the Drugs and Cosmetics Act to promote generics and reduce the cost of medicines.

Two new All India Institute of Medical Sciences(AIIMS) are proposed to be set up in the states of Gujarat and Jharkhand. This is a welcome move and operationalizing these Institutes and staffing them with quality resources needs to be expedited.

The proposal to restructure medical education and add 5000 post graduate seats for specialist courses is a much needed initiative. Government has decided to start DNB (Diplomate National Board) courses in district hospitals and municipality hospitals across the country. The readiness of these hospitals for offering DNB courses needs to be ensured.

The move towards provision of a more comprehensive primary care by converting 1.5 lakh sub centers in Indian villages to health and wellness centers is a positive development. The blueprint for this will need to be examined for its appropriateness to deal with India’s disease burden as well as for a greater focus on preventive care.

The government has set short and medium term targets for key health indicators and wants to bring down the MMR to 100 by 2018-2020 and IMR to 28 by 2019. Besides this, Finance Minister announced preparation of action plans to eliminate Kala Azar and Filariasis by 2017, leprosy by 2018, measles by 2020 and tuberculosis (TB) by 2025. Some of these targets look ambitious and will need to be backed up by concrete strategies and initiatives. Also no specific announcements have been made for combating Non Communicable Diseases which are likely to constitute 75% of our disease burden in the future which is alarming.

One of the marquee schemes from 2016-17 budget, National Health Protection Scheme was expected to provide a 1 lac health insurance cover to all BPL families (upto 1 lac annual income). It was further expected that this cover would be rolled up to include families with upto 2 lacs income also. The Budget notes on the contrary suggest that the previous scheme is yet to be implemented and still awaits cabinet approval. The budget allocation under the scheme has been reduced from the previous year which is disappointing.  Also, some impetus to generate demand for health insurance through additional exemptions was expected which do not feature in the Budget.

Overall, this budget has provided some policy direction and re-iterated the Government intent to address some of the critical challenges facing the Health Sector.  These have to be backed up with appropriate action.

Information for editor reference only.

- By Charu Sehgal is Partner, Deloitte Touche Tohmatsu India. Views expressed are persona.

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