BackBudget and health: plans plenty, short on funds and execution
The to-do list in the health sector is so vast that it does seem like a formidable task
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The Bharatiya Janata Party’s (BJP’s) election manifesto gives ample clues on what the budget may hold in store for the health sector. But what is unclear is if these announcements will be backed by new funding, or existing allocations will be funnelled into new schemes.
Public health expenditure is a neglected area and amounts to only 1.2% of gross domestic product (GDP), according to the 2012-13 Economic Survey, which is much lower than countries such as China, Brazil, Mexico and Russia. Poor quality of public health services forces people to spend out of their pocket, with no safety net in the form of insurance. Private expenditure on health accounted for 2.9% of GDP, according to the survey.
The BJP manifesto had announced radical reform for the national rural health mission, which it says has failed to meet its objectives. What form this restructuring will take may be announced in the budget. But one scheme in the making is a national health assurance plan, to provide universal healthcare. If this takes care of medical expenses, whether incurred at the doctor’s clinic or in a hospital, it can be a major step for the ailing and for the healthcare sector. At present, most insurance schemes cover hospitalization only.
The manifesto makes the usual motherhood statements such as training and education, improving public health infrastructure and improving rural healthy delivery. The to-do list in the health sector is so vast that it does seem like a formidable task. Reducing infant mortality, maternal mortality, the linked issue of lowering malnutrition and improving availability and quality of healthcare services are some pressing problems. State governments play a critical role in execution and unless they are brought on board, reforms in the health sector will be difficult to implement.
The current fiscal year has little time to implement big schemes and show results. But people will still look for innovative thinking and not just shuffling of resources and renaming of schemes identified with the previous government.
From the industry viewpoint, broadly speaking, it would be seen as positive if healthcare infrastructure improves, especially in rural areas, and if insurance leads to better purchasing power. These are changes that will happen in the longer run. Any specific schemes that involve the private sector, either in the supply of medicines or in setting up healthcare infrastructure, could be construed as being positive for the industry.
The government has already given high levels of weighted tax deduction for research and development, and may not increase it further. If any relief is given to special economic zones (SEZs) on the minimum alternate tax front, that could boost earnings for large Indian pharmaceutical companies who have set up SEZs. Pharma shares have underperformed as the focus has shifted to growth stocks. Since January, the S&P BSE Healthcare index has risen by about 9% compared with around a 20% increase in the broader market.
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