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How High Should Your Expectations be from the Union Budget 2018 With the tax on insurance rising from 15% to 18%, health and pure life insurance should be considered essential and exempted from taxation

By Huzaifa Shehabi

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With the 2018 Union Budget scheduled to be presented by Union Finance Minister Arun Jaitley on 1st February, several changes in the country's financial allocations are expected. Last year, despite lacking any mention in the budget, a sum of INR 48,000 Crore was allocated for the healthcare sector.

An Analysis of the Previous Budget

Targets were set for eliminating diseases like Kala-Azar and Filariasis by 2017, Leprosy by 2018, Measles by 2020, and Tuberculosis by 2025, besides constructing two new AIIMS in Gujarat and Jharkhand, and converting 1.5 lakh sub-centres in the interior to health and wellness centres. The Infant Mortality Rate and Maternal Mortality rates were to be brought down to 28 per 1000 live births and 100 per one lakh live births respectively, and the Drug and Cosmetic Act was also to be remodelled to improve access to critical generic drugs at reasonable prices. New rules were also to be drafted for medical devices to make them more affordable and attract investment in the sector. Additionally, a sum of INR 6000 Crore was allocated for the National Health Protection (NHCP) scheme, including a health insurance of INR 1 lakh for BPL families.

Will this Year's Budget Allay the Concerns?

The expectation from the medical fraternity and the need of the hour is an equal focus on all levels of care as neglecting any one area will lead to a drop in quality and this will not bode well for the overall improvement and growth of the healthcare industry. For years now, India's public spending on healthcare has not picked up in a significant way but this needs to be addressed as health care spends as a share of the GDP is well below OECD levels. On the ground, the feeling is that this year's budget is expected to focus primarily on rural and infrastructural development, consisting of a number of rural healthcare SOPs, intended to help extend health insurance to rural India and increase the allocation for the National Rural Health Mission. An increase in funds allocated for training of medical staff, especially in government-run health care centres, is also expected. With regards to medical education and training, there is a palpable expectation from the healthcare industry. Key decision makers must look at addressing the shortage of seats at Post-Graduate levels – especially for specialised courses – as the proper and smooth functioning of the healthcare industry can only be accomplished by trained medical professionals.

Strict Compliance and Monitoring the Need of the Hour

In spite of various rumours doing the rounds on social media, the government has upheld the 5% service tax on healthcare services. With the tax on insurance rising from 15% to 18%, health and pure life insurance should be considered essential and exempted from taxation, and tax benefits should be extended to HNI's looking to invest in healthcare. The cap of INR 15,000 on tax-free medical allowance also needs to be reconsidered, and measures for price control and transparency around drugs have to be taken. The Jan Ausadhi Kendras need to be monitored, and the government's stance on generic drugs for price control and tax rebates also needs to be observed. Based on recent disruptions caused by the National Medical Commission (NMC) Bill, the Budget could also include SOPs for Ayurveda and Homeopathic medicines and practitioners, and reflect an increase in the spending of the AYUSH ministry.

Finally, the expectation from the healthcare sector is that if the sector is to be transformed, the government has to accord national priority status to the healthcare sector. This will lead to synchronized efforts between public and private players where long-term planning and financing can be prioritized. Moreover, it will also send the right message to investors looking at the sector as long-term investment plans will spur research & development and also provide momentum towards sprucing up the public healthcare system.

Huzaifa Shehabi

COO, Saifee Hospital


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