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Missing The Bus?

The finance minister has done well by maintaining the fiscal deficit at 3.5 per cent of GDP, giving the rural economy a big push and infrastructure the boost.

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Life expectancy in India has gone up from 63 years in 2001-2005 to 68 years in 2011-2015, an addition of five years over a decade. The linkages between improved health and economic growth were conclusively proved by the United Nations Commission on Macro-economics and Health. The commission concluded that an increase of 10 per cent in life expectancy results in economic growth of 0.3-0.4 per cent each year. The Union Budget 2016 announced by Finance Minister Arun Jaitley has once again followed a beaten path and not embarked on a mission where the basic goals of universal health will be met by 2020.

While the outlay has been increased by 19.3 per cent over 2014-15 to Rs 39,533 crore in 2016-17, the priorities of the spending have not been articulated. The fact that total health spend in the first three years of the 12th Five Year Plan has been Rs 70,000 crore, it is much below the Rs 2,68,000-crore budgetary allocation in the 2012-2017 plan. It shows that it is not just the outlay but allocation towards specific outcome-based programmes which are critical for India’s healthcare. India is a short supply story in healthcare with a shortage of 1.54 million doctors, 2.4 million nurses and to match the hospital beds of developed nations, it needs to add 100,000 beds in the coming decade with an investment of $50 billion. Given the rightful boost to infrastructure development in the country in the budget this was the opportune time for the FM to declare healthcare as a priority sector and give it infrastructure status.

It is very ironical that the agenda in the draft National Healthcare Policy of 2015 does not find a connect in the Union Budget. The rightfully ambitious NHP had laid down a path to Universal Healthcare where all citizens of the country irrespective of income, age, employment will be covered for healthcare services.

To achieve this goal, the government needs to increase its healthcare spending from 1.04 per cent of GDP to at least 2.5 per cent in the first phase. The budget is silent on this path, which effectively means that Universal Healthcare for India has still some distance to travel. A robust healthcare system drives GDP growth through productivity and employment generation. The healthcare sector is currently the fifth-largest employer amongst all sectors in the country and provides direct employment to 5 million citizens. According to a report by FICCI-KPMG, the healthcare sector in India, valued at $73.92 billion in 2011, is estimated to be $160 billion by 2017 and $280 billion in 2020. India’s elderly population crossed the 100-million mark in 2014 and by 2020 the country will have more than 143 million elderly.

In this respect, the decision of the government to provide health insurance coverage of Rs 1 lakh to senior citizens of below poverty line families is a good move. The silver tsunami in the country will bring with it a rise in neuro health issues and a higher burden of expenses towards chronic care. We, therefore, cannot afford to continue in a time warp and must embark on a path to innovate India’s healthcare for its 1.3 billion people.

The non-communicable disease (NCD) epidemic is set to become the most critical economic, social and health challenge for India. The EPIC calculation used by WEF and Harvard School of Public Health estimates that India’s loss of productivity due to NCDs will be $5 trillion between 2012 and 2030. India needs to combat its NCD challenge on a war footing, and unfortunately, the budget is silent on this aspect for this year. The government has fortunately considered one NCD, namely kidney disease and the launch of the National Dialysis Services programme under the National Health Mission in a PPP format is an excellent step, and hopefully in the subsequent years many such initiatives will take shape.

Annoucement of 3,000 stores for distribution of generic drugs under the PM’s Jan Aushadi Yojana is also a good initiative. There are various social healthcare schemes both at the central and state level, but what is needed is a structure where the various social healthcare schemes of the government are brought under a single umbrella for higher accountability and reach. This will also ensure that there is no duplication of resources being directed to the same beneficiaries and that maximum impact is created.

Real estate expenditure on setting healthcare infrastructure has increased more than 7 per cent annually over the past few years and it is becoming increasingly expensive to set up new healthcare institutions. The sector requires support in the form of extention of tax holiday from the current five years to 10 years for private healthcare providers in non-metros for minimum of 50 beds instead of the current 100 beds. This would ensure faster creation of healthcare infrastructure in tier-2 and -3 cities of the country.

Around 80 per cent of the medical devices used in the country are still imported, which adds to the overall cost of delivery. We need a big wave of entrepreneurship in the medical devices sector to create indigenisation and the budget should have attempted to provide more impetus to this sector with the aim of creating more affordable healthcare. With deep penetration of Internet and more than a billion mobile-phone subscribers, the future of healthcare in India will be hugely impacted by the digital wave and thus the government must facilitate its enablement.

The finance minister has done well by maintaining the fiscal deficit at 3.5 per cent of GDP, giving the rural economy a big push and infrastructure the boost. But he has not given much-desired attention to healthcare for a fundamental change in budget 2016-17.

The author is co-founder and CEO of Medwell Ventures

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


Vishal Bali

Vishal Bali is co-founder and chairman of Medwell Ventures and former CEO of Fortis Healthcare Ltd

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