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Healthcare Sector – Budget 2021

The experiences of Covid-19 have delineated the importance for emerging economies to invest in healthcare infrastructure at all levels – primary, secondary and tertiary. The budgetary announcements of the outlay of INR 64,180 crore under the Aatmanirbhar Swastha Bharat Yojana have hit the bulls eye in this area. The approach followed by the Indian government is a marked departure from existing practices of reduction of out-of-pocket expenditure of the citizens.

Quote by Sidharrth Shankar on Healthcare Sector  – Budget 2021 published in Mondaq.

Transformational infrastructure for healthcare – Budget 2021

The government has announced an amount of INR 35,000 crores for the vaccination programme in wake of Covid-19. However, the negotiations between Indian vaccine manufacturers had hinted at a ballpark figure of Rs 60,000-70,000 crores for only the procurement of vaccines during the first phase. Thus, the budgetary outlays falls short of the initial estimates. It is important to note that this estimate also excludes the costs for transformational infrastructure and storage at low temperatures, which have been estimated around $30-80 million.

Quote by Sidharrth Shankar.

JSA Viewpoint Healthcare – Budget, 2021

For FY 21 GoI had budgeted Rs. 69,000 crore for healthcare, which was 1.6% of GDP. The budgeted amount for FY 22 shows a significant increase. If this growth were to be extrapolated, the GoI should achieve the target of healthcare spend of 2.5 – 3% of GDP (as envisaged in the National Health Policy 2017) well before its target date. This is quite promising and clearly illustrates the importance that the GoI is placing on the sector spurred by the Covid pandemic. What is also very commendable is that the GoI has allocated Rs. 35,000 crore for the Covid vaccine as a separate line item. This shows that the GoI has avoided the pitfall of focussing all its resources on tackling communicable diseases at the cost of building healthcare systems generally because of the Covid pandemic, which notwithstanding its materially adverse impact on the health and economy, is an extraordinary event. The GoI has thus avoided the saliency bias which the Economic Survey had warned against.

Quote by Rohitashwa Prasad published in IIFL Securities, Pharmabiz and Global News Network of India.

Pre Budget – JSA Livewire Budget, 2021

With unprecedented times, we see unprecedented budgets –the Indian Government will have to increase the budgetary allocation to the healthcare and the pharma sector to give impetus to the vaccination drive. The negotiations between Indian vaccine manufacturers hint at a ballpark figures of INR 60,000 to 70,000 Crores, merely to procure vaccines for the Indian population. These estimates exclude the storage and the transportation costs. As a reference point, the allocation for the current FY 2020-21 stood at INR 67,000 Crore, and fell short of the target of 2.5% of the GDP. Basis the statistics of the Finance Ministry, the Indian Government has restricted its budget allocation for the health sector between 1.2% to 1.6% of the GDP in the previous decade (2010-20). To counter the pandemic’s effects, the Government will need stretch to its bottom dollar. The Government should also seek to increase the monetary allocations under the PLI Scheme to attract investments, provide faster single-window approvals, reduce/exempt duty on import of inputs and parts of medical devices, and rationalise GST rates on parts used in manufacturing of medical equipment.