Union Budget Special-2010

Not really in the pink of health

Economic growth must bring with it a faster growth in a country's healthcare sector. Currently healthcare accounts for 5.2% of India's GDP, with government spending at a paltry 0.9%. This limits the extent and effectiveness of the coverage the government can provide. Industry experts are now asking: Can the sector be assigned a priority status? Can we have a strategy to help India's public and private healthcare spending reach 7-8% of GDP over the next 5 years?

The previous budget did give a boost to rural healthcare. Allocation under the NRHM (National Rural Health Mission) scheme was increased, and more than 50 lakh families below the poverty line in 18 states and Union Territories were issued bio-metric smart cards. This year the NRHM needs to have a higher outlay and its reach should go beyond the current 18 states. The RSBY (Rashtriya Swasthya Bima Yojana) scheme which was launched in 2008-09 was a good initiative to provide health insurance coverage to poor households. Getting all states under the RSBY scheme with increased budget allocation will provide a boost to the industry.

Policy initiatives should also be aimed at providing thrust to public private partnerships in healthcare facilities. Industry is expecting the FM to provide subsidies to tertiary care providers in Health Parks, similar to the STPI scheme (which helped boost the IT sector). This would help provide affordable tertiary care to the less affluent as well as those who fall under government healthcare schemes. Increased allocation and focus on National Programs for the Elderly would improve the healthcare system for the elder population, and help ease the challenge.

Over the years we have seen considerable focus on healthcare, however given the fact that the country's position on health parameters is unsatisfactory when compared to some of its neighbours, the budgetary outlay for the healthcare sector still seems insufficient and the country is still in need of more funds and health improvement programs.

Pharma companies specifically have been asking for an increase in the weighted average for R&D deduction for a long time now. If it comes through this would be a positive for the industry. On the indirect taxation side, pharma sector does not expect changes in the excise structures. Concessional rates for certain categories of life saving medicines are also widely expected.