The Indian healthcare sector is buzzing with optimism following the comprehensive reforms announced in the Interim Union Budget 2024-25. The first full-fledged Budget of the Modi 3.0 government presented on Tuesday by Finance Minister Nirmala Sitharaman demonstrated a commitment to Nine Priorities (9Ps) to benefit the healthcare sector directly and indirectly.
Healthcare leaders and experts hailed the government’s effort to make oncology treatment affordable by exempting custom duties on three cancer medicines and ratonalising import duties on med tech such as x-ray tubes and flat panel detectors.
However, the healthcare industry was a little disappointed as its expectation of higher budgetary allocations for the sector that figured in the interim budget were not fulfilled. The unfulfilled demand for infrastructure status for the hospital sector also disappointed the industry. Nevertheless, the healthcare industry welcomed the push for innovations, research, and development under the 9 Ps with healthcare leaders looking at the next-gen reforms as transformative and progressive.
Ms. Sandhya J, Group CFO, Narayana Health, said the Union Interim Budget allocated Rs 89,287 crore to healthcare. There is no major change in the allocation to the healthcare sector. The Finance Ministry has made commendable efforts to address long-term capacity building through nine broad priorities with a clear roadmap. She welcomed the budget’s focus on exempting key cancer medicines and reducing import duties on med tech technologies such as x-ray tubes and flat panel detectors to make them more affordable, saying these measures would give the industry the ability to pass the benefits to patients.
“While we appreciate these initiatives, certain expectations remained unmet. The healthcare sector is a long-term industry that requires long-term affordable credit facilities. Similar to infrastructure projects that have access to 20-30-year bonds, hospitals should receive the same status and have access to extended credit term facilities. As an essential service, lack of Input credit increases the cost of service, which could have been addressed,” added Ms Sandhya J.
“Since customs duty is a burden, along with 80% of medical equipment imported in the country, we will definitely await some positive action in that space. The aim is to bring down the landed cost of health care. We will look forward to seeing how the thrust on research helps innovation in health care. As these issues are addressed in the future, it will greatly benefit the healthcare industry and contribute to sustainable growth,” said The Narayana Health Group CFO.
Finance Minister Nirmala Sitharaman has outlined the government’s Nine Priorities and some of them would have trickle-down effects on the healthcare sector too. However, the budgetary fund allocations remain the same as mentioned in the interim budget.
“The operationalisation of the National Research Fund and the establishment of a financing pool of one lakh crore rupees for private sector-driven research and innovation are pivotal steps towards fostering a culture of innovation. This initiative will enable the development of advanced healthcare solutions, ensuring that the sector keeps pace with global technological advancements. Furthermore, the exemption of customs duties on three cancer medicines is a significant move to strengthen domestic capabilities in the healthcare sector,” said Mr. Joseph Pasangha, COO, SPARSH Group of Hospitals.
“Effective collaboration between the government and the private sector will be essential to fully realizing the potential of these initiatives. The increased focus on infrastructure investment, coupled with the robust support for research and innovation, marks a transformative approach to strengthening the healthcare sector,” added Mr Joseph.
The Union Budget 2024-25’s strategic priorities, particularly Employment and Skilling, and Innovation, are poised to have a transformative impact on the healthcare sector.
“The abolition of the Angel Tax is a landmark decision aimed at invigorating India’s startup ecosystem. Healthcare startups have been revolutionizing the way India deals with its challenges. This move eliminates a major hurdle that has stifled growth and deterred investment in startups. Coupled with procedural simplifications and an emphasis on digitalization, this policy change is poised to drive economic growth, attract global investment, and create new job opportunities, marking a significant step towards a vibrant and dynamic startup landscape in India,” said Mr. Baldev Raj, Chief of Prius Brands and Partners.
“Enhanced support for medical research and healthcare startups will drive advancements in medical technology and treatment, improving patient outcomes and healthcare accessibility. Strengthening healthcare infrastructure further supports the efficient functioning of healthcare services, particularly in underserved areas, leading to a more resilient and responsive healthcare system,” added Baldev Raj.
Overall, while the budget has made significant strides in enhancing healthcare access and infrastructure, the healthcare leaders and experts hope that the government will consider the unfulfilled demands of the sector during the post-discussions and while finalising the Union Budget even as they believe that the government has taken some positive measures to create a new healthcare economy in the country.