Experts point out hits and misses in health sector

Demand regulator in hospital sector, long-term credit and tax incentives

Anurag Kashyap, Director- Finance & Strategy, TR Life Sciences- a Healthcare Consulting Firm.

Union finance minister Nirmala Sitharaman’s ‘Sapt Rishi’ priorities, which include inclusive development, last-mile service, investment, infrastructure, youth power, and green growth, augur well for the development of the healthcare sector as well, stakeholders have said.

In terms of higher financing and other expectations such as setting up a regulator for the hospital sector, long-term affordable credit facilities, etc., the experts say that Union Budget 2023-24 has more ‘misses’ than ‘hits.’ However, the sector is optimistic that with pragmatic provisions, the government would consider the long-pending demands of the sector before finalizing the budget.

With a budgetary allocation of Rs 89,155 crore – up from Rs 86, 200 crore last year – to the Ministry of Health and Family Welfare, the government has shown its intent to increase public spending to improve the health delivery systems in the country. A hike of nearly Rs 3,000 crore augurs well for the implementation of key schemes and that would benefit the people, the experts said.

They said the Union Budget has accorded priority to capacity building and the setting up of 157 nursing colleges is a clear manifestation of that. Another provision includes a mission to eliminate sickle-cell anemia by 2047 and it aims to screen 7 crore people in the 0 to 40 years age group in affected tribal areas.

We were expecting some incentives for green hospital projects, PPP, provisions for long-term credit facilities, a dedicated regulator for the hospital sector, and rationalization of import duty on medical equipment. Some of our expectations remain unfulfilled. However, we are hopeful that in the ‘Sapt Rishi’ model of development, the government would find out some ways to consider the much-needed reforms while finalizing the Budget 2023-24, said, Anurag Kashyap, Director- Finance & Strategy, TR Life Sciences, a Healthcare Consulting Firm.

In terms of budgetary allocations, the Ministry of Ayush has got Rs 3647 crore. Major schemes such as the National Health Mission (NHM) have not got more Rs 25 crore hike. The NHM was allocated Rs 28,974 crore for FY 22-23, which has been increased to Rs 29,085 crore for FY 23-24. Ayushman Bharat PMJAY has got a hike of nearly Rs 800 crore. The allocation has been increased from Rs 6,412 crore to Rs 7,200 crore for the next fiscal.

The experts said it is encouraging to note that the government has accorded priority to the National Digital Health Mission and increased its allocation from Rs 140 crore to Rs 340 crore for FY 23-24. However, healthcare experts find that the drastic cut in the PM Swathya Suraksha Yojna would have cascading effects on public health insurance programs. In 2022-23, the scheme was allocated Rs 8,269 crore, which has been reduced to Rs 3,365 crore in the Budget for 2023-24. Provisions for a higher budgetary allocation is positive but in real terms, the sector needs more to achieve the target of 2.5% of GDP, they said.

Commander Navneet Bali, regional director, Narayana Health, North, said, “Union Budget 2023 looks progressive and inclusive for the healthcare sector. The government has taken a holistic approach by focusing on the ‘Sapt Rishi’ Model and our sector is aligned with all the seven pillars mentioned by the finance minister in her speech. We were expecting some measures on capacity building in the sector and it is promising to note that the government has announced setting up 157 new nursing colleges. This would enhance our capacity and fill the gap in terms of human resources. The proposed mission to eliminate sickle cell anemia by 2047 is a very positive step.”

The experts pointed out that the government has given priority to public-private partnership (PPP) as facilities of select Indian Council for Medical Research (ICMR) labs will be made available for research by public and private medical college faculty.

Sugandh Ahluwalia, Chief Strategy Officer, Indian Spinal Injuries Centre said, “An important takeaway is a push to public-private partnership by making available facilities in select ICMR labs for research by public and private medical institutions. As we were expecting some incentives in Medical Value Tourism, the overall thrust to promote tourism, thereby extending facilities to overseas tourists, would also benefit medical tourism in the country. With the announced measures, the healthcare industry is hopeful to conduct more inter-disciplinary research and develop cutting-edge applications, and scalable problem solutions.”

A new program to promote research and innovation and pharmaceuticals through centers of excellence is a very pragmatic move, the experts feel, saying this will take India to a new high in terms of dominance in global markets.

The budget encourages the industry to invest in research and development in specific priority areas. Against the backdrop of ‘Amrit Kaal’, the Budget 2023-24 has identified seven priorities (Sapt Rishi). Healthcare is definitely aligned with all the priorities. It is promising to note that the government has made sincere efforts to increase public spending in the sector to 2.1% of GDP in FY23-24. This hike would take the government near the target of 2.5%.  The increase in the health ministry’s allocation would help in strengthening the primary, and secondary delivery systems along with expanding health and wellness centers across the country,” said Baldev Raj, Health Expert and MD, Prius Communications.

The government has acknowledged the importance of research and innovations in the sector. Making ICMR labs available for private institutions, dedicated multidisciplinary courses for medical devices, and the new pharma program through centers of excellence reflects the government’s intent to create a new healthcare ecosystem, they said.  

Overall, the experts find that the government has accorded priorities for key areas such as medical and nursing education, and the promotion of research in the healthcare sector. Push to private-public participation in medical education, research, innovations, and pharmaceutical would go long way to offer effective solutions. 

However, they pointed out that there are some misses in the budgetary announcement pertaining to the expectations of the sector. They hope that the government would consider the demands such as setting up a regulator, long-term credit, and tax incentives while finalizing the budget.


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