Budget 2022: Healthcare sector seeks allocation up from 1.8% to 3% of GDP

The healthcare sector is expecting finance minister Nirmala Sitharaman's 2022-23 Union Budget to earmark at least 2.5% to 3% of India's GDP to make India face future pandemics and to tackle the current Covid-19 crisis. The Finance Budget of FY 2021-22 had allotted ₹2,23,846 crore for healthcare, a 137% increase over FY 2020-21 budget. However, that was only about 1.8% of the GDP.

"Our government should further increase healthcare spending to 2.5% to 3% of GDP this year and should not wait till 2025 to achieve the earlier target of increasing health care spending to 2.5% of GDP. European countries' spending on healthcare is around 9% of GDP. Long term aim of our country should be to reach that level within the next 7 to 10 years," says Akshay Daftary, director at SIRO Clinpharm, one of the leading clinical research organisations in the country.

They say India now needs to spend more on strengthening its primary healthcare system, which is the backbone of healthcare in India, public healthcare, preventive healthcare, nutrition in children, and aggressive vaccination campaigns in the wake of Covid-19.

"We also need to strengthen the public healthcare system by upgrading the infrastructure and personnel at government hospitals, specifically strengthen pediatric care and pediatric intensive care, along with setting up of training programs and teams of intensive care doctors in government hospitals including in adult intensive care," says H Sudarshan Ballal, chairman, Manipal Hospitals.

They also believe India needs to take forward to the next level initiatives like National Digital Health Mission (NDHM) and National Digital Health Blueprint (NDHB) and the PLI scheme for boosting domestic manufacturing of medical devices.

"An integrated, digital-first healthcare system will be pivotal to India’s overall healthcare industry in the forthcoming years. For this, we are looking forward to a larger emphasis from the government on R&D and innovation in healthcare tech," says Shravan Subramanyam, president & CEO of GE Healthcare India and managing director of Wipro GE Healthcare. He suggests the budget to focus on incentives for digital tools to support patient care and hospital workflow, waiving off the duties and CESS on med-tech, and releasing sectoral payment dues to free up working capital for investments in inventory of critical spare and lifesaving equipment.

"Incentives should be provided to the private sector so that they can establish Covid care centres and a medical innovation fund should be set up to provide capital to companies promoting digital healthcare infrastructure. Many startups are utilising artificial intelligence and machine learning to provide detailed reports to patients regarding medical conditions," says Ankit Gupta, managing director at Park Group of Hospitals.

The government must allocate enough resources for genetic and genome research and epidemiological studies besides hiking allocations for general healthcare-related R&D, says Praveen Sikri, CEO of Ikris Pharma Network.

Historically, resource allocations for the healthcare sector in the annual Union budgets have been overwhelmingly skewed towards curative healthcare, notes Jayant Khosla, MD & Group Head of VLCC Health Care.

"It is now time that preventive healthcare gets larger attention, subsidised medicines and access to better health enhancement services such as wellness clinics, dietary consultations and sports activities. The spend on preventive healthcare activities should be considered for tax exemption up to a limit in addition to mediclaim insurance which is covered for curative measures," he says.

Mental health is another area the sector experts expect more investment and attention. In the Union Budget 2021-22, the budget for the National Mental Health Program (NMHP) remained the same as previous year – ₹40 crore. KR Raghunath, senior chairman, Jindal Naturecure Institute says such an allocation is too small considering the mental impact caused by Covid-19. "The government must set up counselling centres, drive aggressive promotional health campaigns encouraging people to consult with psychologists and psychiatrists as well as invest in community health physicians and public health professionals to strengthen mental health systems," he says.

For an R&D push in the med-tech sector, Anish Bafna, CEO & MD of Healthium Medtech, suggests tax holidays for a period of 10 years for spending on research, increase in export incentives under the newly introduced Remission of Duties and Taxes on Export Products Scheme (RoDTEP), rationalisation of custom duty, roll back of health cess on imports of medtech products and amendment of SEZ Act to allow SEZ medtech manufacturers to sell their produce in the domestic market.

"Facilitating of single-window clearances for government approvals for the local companies, rebates on costs related to product registrations in foreign countries and keeping exported products outside the purview of price control will together contribute to a more significant push for exports," he says.