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Budget 2022 expectations: Healthcare needs a financial booster dose

At no time in the history of India’s union budget has healthcare come on top of the tick boxes. In the last year’s budget, healthcare got a sharp focus as India was on the cusp of the second wave of the COVID-19 pandemic. This year is no different except that the country is in the grip of the Omicron variant which is highly infectious. The financial allocation for healthcare in the upcoming budget would undoubtedly need a booster dose.

Key highlights

  • We should aim to raise it to at least 2.5 per cent of GDP this year – much ahead of the targeted year of 2025.
  • Automated health screening kiosks have come of age and with internet connectivity penetrating deeper in rural areas, medicare can be made accessible through digital technologies.

Some of these devices are India-specific and tailormade for rural areas.

  • Deploying them will decrease the pressure on district hospitals and address the issue of shortage of trained manpower.
  • Upskilling and re-skilling are vital in the future as the contours of disease profiles keep changing.
  • The government’s National Digital Health Mission initiative has the potential to redefine India’s future healthcare eco-system and adequate investments must be allocated for making it more efficient and all-pervasive.

Last year, the COVID pandemic prompted the union government to nearly double its healthcare budget. This year too, the most prominent area of focus in Budget 2022 is expected to be healthcare. A massive increase in healthcare spending in this budget will not be out of place. The last Budget announced a 137 per cent increase in healthcare spending to address some of the gaps. Healthcare accounted for about 1.8 per cent of GDP in 2021. We should aim to raise it to at least 2.5 per cent of GDP this year – much ahead of the targeted year of 2025. Despite the focus on the pandemic at the moment, it is critical to increasing the proportion of spending on preventive healthcare and wellness. Ayushman Bharat is undeniably a positive step toward achieving the goal of universal healthcare; however, more funding is required to ensure its long-term success.

Such investments are mandatory because the pandemic has taught us a lesson that substantial investments in healthcare can help buoy the nation’s economy.

The COVID pandemic exposed the inadequacies of the nation’s primary healthcare system which is the backbone of healthcare in India. This will need to be the focal area apart from public healthcare, preventive healthcare, nutrition in children and aggressive vaccination campaigns to include COVID vaccination for all. At the same time, the focus should not be just on the pandemic alone but also on ongoing programmes like anti-TB campaigns, cancer care, kidney care etc.

Apart from strengthening the public healthcare system by upgrading the infrastructure and personnel at government hospitals, the budgetary allocation should also look at overhauling paediatric care and paediatric intensive care.

Setting up or shoring up the infrastructure in the public health sector should logically follow a programme to set up training programs and teams of intensive care doctors in government hospitals, including in adult intensive care.

With lifestyle disease on the rise even in rural areas, efforts should be made to allocate funds to set up more diagnostic labs across the country with modern equipment. The government should also set up more medical colleges, especially in underserved areas and upgrade district hospitals to be the teaching hospitals for these colleges.

While setting up infrastructure may cost more, the Union Finance Minister should look at bridging the rural-urban divide in healthcare through digital technology. Automated health screening kiosks have come of age and with internet connectivity penetrating deeper in rural areas, medicare can be made accessible through digital technologies. Some of these devices are India-specific and tailormade for rural areas. Deploying them will decrease the pressure on district hospitals and address the issue of shortage of trained manpower.

The lockdowns imposed due to the COVID pandemic triggered a steep growth of the telemedicine sector. The telemedicine segment is growing at a rapid pace and in the future, more technological innovations are likely to revolutionise healthcare. Increased allocation of budget for promotion of telemedicine, home-based healthcare and national digital health mission implementation will help in building a strong healthcare ecosystem in the country.

Telemedicine has the potential to improve access to healthcare in remote and rural areas. Home-based healthcare will reduce the burden on limited healthcare facilities. Digital Health along with various innovations should be encouraged for India’s future growth and healthcare needs. The government should support private players and startups in this segment to increase the current coverage of the locations including tier-2 and tier-3 cities to provide advanced healthcare facilities in these areas.

The government should incentivise start-ups in the areas of developing healthcare technologies that would aid in early detection, monitoring, screening and diagnosis of health ailments.

While on the topic of technology, a major gap that resurfaced prominently due to the pandemic is the continuous medical education and training of the healthcare workforce. This can be addressed by leveraging online education technologies specially designed for the healthcare industry.

The time has come for the healthcare education segment to be integrated with the laudable National Digital Health Mission. At the same time, the FM must make focused budgetary allocation for the healthcare ed-tech industry or incentivise the sector through innovative fiscal policies.

Time is also ripe to create an across-the-board collaboration opportunity for healthcare and ed-tech partners to create rich course curricula and learning material for healthcare professionals while incentivising them to pursue the programs. Upskilling and re-skilling are vital in the future as the contours of disease profiles keep changing.

Innovative steps like allocating funds to create awareness about why preventive healthcare is important especially concerning non-communicable diseases – cardiovascular diseases, diabetes, hypertension, obesity and chronic respiratory diseases should receive attention.

The FM should also give a tax break for 10 years for setting up facilities in upcoming economic zones, MedTech Parks & MedTech Manufacturing facilities, similar to the tax break given for the pharma sector. There should be a reduction in customs duty for components and SKD imports to promote manufacturing in India.

The COVID pandemic has highlighted the need for research and development, specially in making the nation prepared for newer infections and viruses. Pharmaceutical companies played a major role during the pandemic. From manufacturing vaccines to critical drugs, the sector’s contribution was immense. It is now the ripe time to further boost the pharma sector so that India can truly become the ‘Pharmacy of the World.’ The long-pending recommendations for the Katoch committee to activate Active Pharmaceutical Ingredients (API) production should be expedited in these trying circumstances. Today, the pharma sector is dependent on China for APIs. The government should also encourage start-ups to make Key Starting Materials (KSM).

The Government should think of providing grants to support R&D and manufacturing facilities for important medical equipment like IVD instruments, cath lab, CT scanners, MRI scanners, ultrasound, patient monitor, ventilators etc. To boost domestic manufacturing of medical devices and make India self-reliant, there is a need to increase the total outlay allocated to the PLI Scheme (Production Linked Incentive). Preference should be given to products manufactured in India in public procurement.

Currently, India is among the top 20 markets for medical devices globally. And this market is expected to increase at a 37 per cent CAGR to reach $50 billion in 2025. However, India currently imports ~80 per cent of medical devices requirements. This can be reduced by facilitating manufacturing in the country. Since the medical device industry is still in its infancy, establishing an efficient ecosystem is vital for long-term success. More medical device parks should be built and this will help establish a robust and cost-effective ecology for the country’s medical device industry.

Innovation is the key. India needs to build a vibrant ecosystem in this area. The budgetary impetus to develop the innovation ecosystem, support for industry’s R&D efforts whether by way of tax breaks, further support to the National Research Foundation, other incentives to life science start-ups in cutting edge areas such as cell and gene therapy need more attention.

The government could also have a relook at the high customs duty on the import of diagnostic equipment and kits and effect a reduction considering the challenges thrown by the pandemic. This can help large laboratories to improve efficiencies and increase R&D investments.

This will reduce our dependence on international companies for the same. Simultaneously, the government should consider reducing the taxes imposed on medical equipment that are very essential, which will result in bringing down the overall medical expenses for an individual, specially for the senior citizen community who find their medical bills financially burdensome.

Healthcare infrastructure creation in tier 3 & 4 towns should be given tax breaks and incentives for private players. This will enable healthcare to reach India’s rural areas.

Another important step should be in the direction to increase Income Tax Exemption limits for medical insurance. Because of the COVID pandemic, insurance companies increased the premium and given this, the Insurance premium Tax Exemption Limits have to be appropriately increased for all classes.

On the insurance front, the government should take into consideration the financial needs of India’s growing senior population and recommend policy measures to help them have income security in the autumn of their lives. It should also consider the inclusion of care-at-home services and assisted living facilities under the mandate of health insurance. This will be a crucial step in building a wholesome senior care ecosystem in India, given the fact that the demand for dependable, specialised and professional senior care services has witnessed a steady rise, specially during the pandemic.

The previous budget had plans for critical initiatives under the Aatma Nirbhar Swasth Bharat Yojana including setting up mobile hospitals, a national institution for ‘One Health’, nine Bio-Safety Level III laboratories and four regional National Institutes for Virology. The move will need further acceleration.

The government’s National Digital Health Mission initiative has the potential to redefine India’s future healthcare eco-system and adequate investments must be allocated for making it more efficient and all-pervasive. Innovation and collaboration between the different stakeholders in the industry is a must to ensure that access to healthcare becomes truly a basic social right and not a privilege.

To boost the MedTech and diagnostics sector, the anomaly of inverted duty structure & custom duty should be addressed. Zero custom duty on imported products has led to uncontrolled dumping of non-standardised Chinese products in the Indian market. This is negatively impacting Indian manufacturers who maintain high standards. Also, the duty on finished imported products is lower compared to the import of raw material. This does not favour domestic production. This is why India is dependent on imports. This should end and the goal should be to be self-reliant through domestic manufacturing.

In this connection, the FM must increase basic customs duty on import of medical devices to 15 per cent from the current 0 to 7.5 per cent duty to ensure cost advantage over China.

Faster government permissions and single-window clearances; ease of doing business; adequate financing; competent infrastructure; soft loans with longer repayments; should be key focus areas in the coming budget to give the medical device industry a spur.

Finally, we have all heard that health is wealth; now we need wealth to be put into the healthcare sector to make India truly Swasth Bharat.
Authored by Dr Swadeep Srivastava, Founder, HEAL Foundation; Founder & Mentor Heal Health Connect, first published in BW Healthcare World.

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