Budget 2021: Govt eyes healthcare ramp-up, ignores PE-favourite bulk drugs

By Joseph Rai

  • 01 Feb 2021
Budget 2021: Govt eyes healthcare ramp-up, ignores PE-favourite bulk drugs
Nirmala Sitharaman | Credit: Reuters

Finance minister Nirmala Sitharaman in the Budget proposed a 137% increase in the government's spending on healthcare as it plans to roll out a new centrally-sponsored scheme and set aside a corpus for Covid-19 vaccine.

Stakeholders largely cheered the government's moves aimed at capacity building and creating "wealth and wellness" in a country that is battling the world's second-highest coronavirus caseload after the United States. 

But a few were not convinced given the scale of the pandemic and the budget not paying attention to the bulk drugs segment and elderly care.


The Budget outlay for the next fiscal beginning April is Rs 2,23,846 crore ($30.2 billion) as compared with Rs 94,452 crore in FY21.

The total Budget allocation for healthcare includes Rs 35,000 earmarked for Covid-19 vaccine, said Sitharaman. The government is committed to provide further funds for it, she added.

The finance minister also proposed to roll out a new scheme called PM AtmaNirbhar Swasth Bharat Yojana with an outlay of about Rs 64,180 crore over six years. This is in addition to the National Health Mission.


The new scheme will develop capacities of primary, secondary, and tertiary care systems, strengthen existing national institutions, and create new

institutions to cater to detection and cure of new and emerging diseases.

Sitharaman said this will involve supporting 17,788 rural and 11,024 urban health and wellness centres and setting up integrated public health labs in all districts and 3,382 block public health units in 11 states.


The new scheme also proposes to expand the integrated health information portal to all states and union territories (UTs) to connect all public health labs, she added.

Under the new scheme, the government plans to launch a national institution for health, a regional research platform for WHO Southeast Asia Region, nine biosafety Level-III laboratories and four regional National Institutes for Virology.

Vishal Bali, executive chairman at TPG Growth-owned single speciality platform Asia Healthcare Holdings (AHH), said that the focus on healthcare with the new scheme shows that capacity-building is now a key priority for the government.


Dharminder Nagar, managing director of private equity firm Creador-backed hospital chain Paras Healthcare, said that the new scheme can bring in more hospitals under the government's Ayushman Bharat scheme in Tier II and Tier III cities for the benefit of the poor.

Ayushman Bharat is the government's healthcare insurance scheme, which was rolled out in September 2018 with the aim to benefit 10 crore poor families or 50 crore individuals who make up nearly 40% of India’s population.

Ritesh Kumar, partner at legal firm IndusLaw, said that the healthcare sector could also get a boost through the government's proposal to increase the foreign direct investment (FDI) limit in the insurance space.


However, not everyone was praising the Budget.

"Healthcare has not been given its due. Big bold steps were clearly missing. It looks like a very safe stand was taken by the government," said Ramesh Kannan, a partner at healthcare-focused private equity firm Somerset Indus Capital Partners.

He rued that pharmaceuticals, especially the bulk drugs segment, was ignored in the Budget. India relies a lot on China for bulk drugs or active pharmaceutical ingredients (APIs). 

But border tensions with China have prompted calls for a boost to India's own bulk drugs segment. Sniffing opportunity, private equity players have piled into the category in India. 

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