Finance minister Arun Jaitley concluded his Budget 2015 speech with a quotation from the Upanishads, “Sarve bhavantu sukhinah, sarve santu niraamayaah” (May everybody be happy, may everybody be free from illness).
His Budget, however, neither announced any significant ramp up in public funding for healthcare, nor did it provide any impetus to research and development in the pharmaceutical and life sciences. It may have kick-started thinking on the healthcare agenda, but the latter needs far more attention to be able to make a significant impact.
While there is an intent within the government for an integrated healthcare system to ensure affordable and accessible healthcare for all, it is not reflected in the Budget allocation to healthcare for 2015-16, which is marginally higher than last year. The opening of six new large public hospitals across the country and the introduction of better health insurance options are strong symbols of change.
It is unfortunate that Jaitley missed another opportunity to provide a strong impetus to the pharma and life sciences sector. His Budget also stopped short of prescribing an investment formula for universal healthcare.
The budgetary allocation for healthcare in 2015-16 is Rs 33,152 crore, a little over Rs 30,645 crore for 2014-15. Significantly, last year, in order to meet its fiscal deficit target, the government had abruptly cut the health budget to Rs 24,400 crore, which reflected the fiscal challenge the sector faces. The total health spend in the first three years of the 12th Five-Year Plan has been about Rs 70,000 crore, way below the Rs 2,68,000-crore budgetary allocation in the 2012-17 period.
The National Health Policy 2015 draft prepared by the ministry of health and family welfare rues the low priority accorded to healthcare by successive governments. “It is unrealistic to expect to achieve key goals in aFive-Year Plan on half the estimated and sanctioned budget,” the report says, adding, “The failure to attain minimum levels of public health expenditure remains the single-most important constraint.”
It is no surprise, then, that public healthcare spending in India, at about 1% of GDP, is the lowest when compared to China’s 3%, Brazil’s 4.1% and 8.3% of the US.
India urgently needs to raise public health spending to at least 2.5% of GDP if the NDA government’s promise of universal health coverage is to be fulfilled. Without this, it will not be able to make much progress towards meeting the healthcare needs of 1.25 billion people. The Indian pharma industry has expressed its willingness to partner the government to help it deliver on the agenda of ‘Health for All’ and enable affordable access to medicines and diagnostics that meet the needs of all patients.
The Indian pharma sector has already done the country proud by being the largest supplier of generic drugs to the world. But, unfortunately, it has missed out on addressing India’s healthcare challenge due to the absence of strong political will and the low priority accorded to this sector.
The industry’s expectations were belied when Budget 2015 did not lend support to its capital investment needs, didn’t incentivise R&D investments or provide any significant tax exemptions for innovation. Other than announcing the Atal Innovation Mission, this Budget has done precious little to enable the culture of ‘Innovate in India’, or to encourage companies that focus on innovation. It did not even reverse the service tax imposed on clinical research organisations introduced last year.
A healthy workforce is critical for Prime Minister Narendra Modi’s ‘Make in India’ mantra to rev up economic growth. Hence, the government needs to seriously invest in ‘Swastha India’ by revitalising existing public health infrastructure, creating new medical centres, promoting partnership models, enabling indigenous manufacturing and incentivising research and development.
This piece was first published in the Print Version of The Economic Times newspaper on March 06, 2015