First Impressions of the Budget 2018 – Healthcare, Pharmaceuticals and Life Sciences

This is the third post in the our new blog series on the Budget 2018. Following our earlier posts (here, here and here) on the impact of the Budget on the Direct and Indirect Tax regimes, this piece focuses on the initiatives proposed under this Budget in the Healthcare sector. We hope you enjoy reading this as much as we have enjoyed putting this together.

A healthcare focused Budget. Universal healthcare on the anvil.

“India cannot realise its demographic dividend without its citizens being healthy”…. Mr. Arun Jaitley, Hon’ble Finance Minister of India in his budget speech of February 1, 2018.

One of the key constituents of the Union Budget for the year 2018-2019 is healthcare. With the Budget envisaging a boost to the healthcare insurance, service provider and pharmaceutical sector, share prices of some key pharmaceutical companies showed a spike during the speech.

The Hon’ble Finance Minister announced two new initiatives under the “Ayushman Bharat Programme“:

• A new flagship National Health Protection Scheme, providing a health insurance cover of ₹5 lakh a family per year for secondary and tertiary care hospitalisation. The scheme will cover 10 crore vulnerable families, with approximately 50 crore beneficiaries. This is being seen as a conscious move towards universal healthcare. The recipe for success here would lie in a perfectly balanced public-private partnership relationship between the government and key players in the healthcare insurance sector.
• Creation of about 150,000 health and wellness centres, to bring quality healthcare closer to the people of India, especially in rural areas. These centres will provide comprehensive health care, including for non-communicable diseases and maternal and child health services. These centres will also provide free essential drugs and diagnostic services. A budgetary allocation of Rupees 1200 Crore has been made for this. The private sector has been invited to participate through CST initiatives in this regard.

Additionally, the Programme makes provisions for setting up  24 new Government Medical Colleges and Hospitals by upgrading existing district hospitals in the country. The objective herein would be to ensure that there is at least one Medical College for every three Parliamentary Constituencies and at least one Government Medical College in each State of the country. This is likely to boost infrastructure development in the sector and the government will leverage the India Infrastructure Finance Corporation Limited (IIFCL) to help finance major infrastructure projects, including investments in educational and health infrastructure, on strategic and larger societal benefit considerations.

With a view towards increasing investments in research infrastructure in premier healthcare (amongst other) institutions, a proposal has been made to launch a major initiative named ‘‘Revitalising Infrastructure and Systems in Education (RISE)” by 2022. A net investment of Rs. 100,000 crore has been earmarked for the next four years. The government would be structuring the Higher Education Financing Agency (HEFA) to fund this initiative.

All in all, healthcare professionals are applauding the Budget as, for the first time, health is at the forefront. There is a lot of hope that the measures announced will be implemented in the same spirit in which they have been formulated and announced.