By Shuchi Ray, Shivali Valecha and Anisha Sekhri
Good health is the backbone of a growing economy. No wonder that Budget 2023 gives prominence to the healthcare sector in the announcements aimed at promoting inclusive development.
In line with expectations, the Budget lays considerable emphasis on research and innovation. A new programme to promote research and innovation in pharmaceuticals through centers of excellence has been promised. It is expected that this programme would be designed to encourage industry to invest in research and development in specific priority areas.
Also, to encourage medical research and innovation with a collaborative approach, facilities in select ICMR Labs will be made available to public and private medical college faculty and private sector R&D teams.
Education and skilling is another focus area of the announcements for the healthcare sector. It is proposed that dedicated multidisciplinary courses for medical devices will be provided in existing institutions to ensure availability of skilled manpower for futuristic medical technologies and high-end manufacturing and research. This is indeed welcome and should help to grow the capabilities of India’s medical device industry and seize new opportunities in this field.
Also, it is proposed to establish 157 new nursing colleges in co-location with the existing medical colleges. Human resources are one of the core building blocks of the health system. Increase in the number of trained nursing staff would help to improve the overall capacity of India’s healthcare infrastructure. The proposition of having these colleges alongside the existing medical colleges would ensure hands-on experience and should prove to be an efficient and effective set-up.
The Budget proposals also stress on the importance of technology and need for scalable solutions using Artificial Intelligence and digital connectivity. ‘Centres of Excellence for Artificial Intelligence’ are proposed to be established, which will include health as one of the focus areas with an objective of conducting inter-disciplinary research and developing scalable solutions. Likewise, labs are proposed for developing applications using 5G services which would also cover health care applications.
These are certainly positive announcements which should benefit the industry if the schemes are rolled out with speed and implemented effectively.
While these are positive steps, a lot was expected from the Budget considering the momentum that the pharmaceutical and healthcare industry had gathered in the recent years. The Indian Economic Survey 2023 noted that cumulative FDI in the pharma sector crossed the US$ 20 billion mark in September 2022 and have increased four-fold over five years until September 2022, to US$ 699 million. It also noted that this sector has been a strong contributor of India’s exports. The Hon’ble Finance Minister in her Budget 2023 address acknowledged the unparalleled scale and speed with which India executed its COVID vaccination drive.
Against this backdrop, the budget allocation to healthcare and pharmaceutical sectors seems muted. The total allocation for the Ministry of Health and Family Welfare in Budget 2023 is Rs.86,175 crore, a meager 3.83% increase as compared to the previous year allocation of Rs.83,000 crore. Further, the 2023 budgetary allocation to Department of Health Research is Rs.2,980 crores and that for Department of Pharmaceuticals is Rs.3,160 crores.
It was noted that there is an increase in the budget allocation to Ayushman Bharat Scheme. It would have been good to have special focus on enabling access to low-cost insurance for those not covered under Ayushman Bharat scheme.
That apart, tax proposals leave a lot to be desired as the GST changes and direct tax incentives hoped for, do not find place in this Budget. It can only be wished that these are considered and announced through schemes to be issued during the year.
The healthcare and pharmaceutical sectors will have a significant role to play in the growth of the country in the coming years. Considering this, greater impetus is desired to keep the momentum on and fuel exponential growth so that this industry can be a significant contributor in the growth journey to India@100.
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Shuchi Ray is Partner, Shivali Valecha is a Director and Anisha Sekhri is a Senior Manager with Deloitte Haskins & Sells LLP.
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