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Budget 2019: Healthcare sector left wanting more despite sizeable increase in outlay
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Union finance minister Nirmala Sitharaman on Friday nearly tripled the allocation for India's universal healthcare scheme Ayushman Bharat and ramped up the overall outlay for healthcare expenditure, which had remained more or less stagnant in the previous three fiscals. 

In the Budget proposals for the financial year 2019-20, the government has increased the allocation to the sector by a little over 15% to Rs 62,659.12 crore from Rs 54,302.50 crore in the previous financial year. This sum is similar to the one announced in the Interim Budget before the general elections that brought the ruling government back to power with a stunning victory.

"While the healthcare allocation had been covered in the Interim Budget earlier this year, it is still a little disappointing that there was no new commitment to healthcare in finance minister Nirmala Sitharaman’s maiden budget,” said Shankar Narang, chief operating officer of Paras Healthcare, a hospital operator backed by private equity firm Creador.

Within the overall budgeted allocation, the government has proposed to set aside Rs 6,400 crore, or about 10%, of the total amount, for Ayushman Bharat, which was launched last September.

The healthcare insurance scheme, which was announced in the previous Budget, aims to benefit 10 crore poor families or 50 crore individuals who make up nearly 40% of India’s population. As per the latest data made public by Indu Bhushan, the chief executive officer of Ayushman Bharat, as many as 28 lakh people have been treated under the initiative since it was implemented nine months ago. 

There was anticipation that more measures would be taken to expand the scope of the scheme beyond secondary and tertiary hospitalisation.

“The industry was intently looking forward to further announcements regarding Ayushman Bharat taking the right partnership approach to a more inclusive participation,” said Alok Roy, chairman of Medica Group of Hospitals, which is backed by private equity firm Quadria Capital.

“Some relief on imported medical equipment could have been provided which would have benefitted the sector,” he added.

Even so, the industry chose saw some positives in other proposals that could benefit the sector.

The government has proposed customs duty reductions on certain raw materials and capital goods including the manufacturing of artificial kidney and disposable sterilised dialysers.

Paras Healthcare’s Narang said that one of the most notable announcements in the Budget was the proposal to establish a National Research Foundation to boost research in all areas. “We hope the government will allocate significant resources through this body towards boosting the field of medical research in India,” he added.

He also said that he expects the proposed New Education Policy to help generate more doctors and specialists in the country by increasing both MBBS and Post Graduate seats in medicine.

By some estimates, India has a shortage of more than five lakh doctors, even as it produces only about 55,000 MBBS graduates and 25,000 postgraduates every year.   

Medica Group’s Roy said that he expects the proposed 100% foreign direct investment (FDI) in the insurance sector to bring more people under the insurance umbrella, which in turn may expedite settlement of transactions in hospitals. This will increase health security at the same time and create more opportunities in the sector. Additionally, the deduction limit for medical insurance that has been increased from Rs 15,000 to Rs 25,000 and for senior citizens till Rs 50,000, is expected to benefit the sector.

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