Budget 2021: Healthcare gets a makeover

As expected, health and well-being topped the list in the six-pillared Budget announced by the Finance Minister (FM) on Monday. The FM began her speech by acknowledging the frontline workers amidst the global Coronavirus pandemic and also lauded India’s actions towards safeguarding not only its citizens but also those from hundreds of other countries.

The long due increase of 137% in budgetary allocations to the healthcare sector, is a welcome move. The Budget has allocated a sizeable sum of ₹2.23 lakh crores (including Covid-19 vaccination expenditure currently budgeted at ₹35,000 crores) to healthcare.

Keeping in perspective the holistic approach of prevention, cure and well-being, the FM has allocated various sums and introduced certain schemes and reforms for the healthcare sector.

In addition to the National Health Mission, a new centrally sponsored scheme, ‘PM AtmaNirbhar Swasth Bharat Yojana’, is proposed to be launched with an outlay of about ₹64,180 crores, over six years, 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.

The scheme will also include support for around 17,000 rural and around 11,000 urban health and wellness centres. The government will establish critical care hospital blocks in 602 districts and 12 central institutions to boost inclusion in healthcare services. The National Centre for Disease Control will also be strengthened across 5 regional branches and 20 metropolitan health surveillance units. The FM announced plans for setting up health labs in all districts and 3,382 public block units in 11 states. The Union Budget further announced plans for setting up a regional WHO centre office, 9 bio-safety level III laboratories, 4 regional National Institute of Virology.

Another notable part of the of the allocation is the thrust on water and sanitation, the allocation for these two itself exceeds last year’s total budget and is a welcome step in addressing the root cause and taking preventive measure. As India's healthcare spend has historically been very low, it is hoped that the present allocations mark a beginning of a strong focus to this sector.

Setting up of critical care hospital blocks and health labs should help in making healthcare facilities available to the public at large and also make the sector attractive from an investment perspective due to generation of local demand. Further, the support in terms of rural and urban health and wellness centers, and integrated public health labs will increase the awareness of healthcare in public leading to ‘Swasth’ India.

While it is heartening to see the government’s focus on building healthcare infrastructure, certain incentives on the direct and indirect tax front such as provision of special tax holidays, increased R&D deduction and rationalising GST rates on critical/ life saving drugs and health care services would have not only provided much needed boost but also served as a reward to the healthcare sector for its vital contribution to the economy. Further, an impetus to R&D was expected in the current Budget which stimulates the private sector engagement into R&D and aims at public : private sector investments into R&D at levels of 1:1. While there is an increase in budget allocation to the Department of Health Research, certain explicit incentives would have encouraged private sector engagements in R&D, aiming at establishing India’s image as an innovation hub.

Nevertheless, the emphasis on health in the 2021 Budget, brings in optimism after the most challenging period faced by the world. The government’s increased allocation for the healthcare sector is a welcome move and it will provide access to medical care for all in the country, fuel job creation and boost economic momentum. The 2021 Budget which aims to adopt a holistic approach to healthcare with a strong focus on wellness, nutrition, environment including drinking water, sanitation, etc., is likely to go a long way in creating a robust health infrastructure. A partnership with private players in healthcare will help hasten the process and strengthen health services. With a proper action plan to produce the desired results, this Budget will definitely take us a step closer to achieving an affordable healthcare system.

Views are personal. The authors are partners at Deloitte India.