Overview of the Budget:
NRHM allocation hiked to Rs 20820 crores
Rs 15,850 crore to be allocated to Integrated Child Development Scheme in 2012-13 as against Rs 10,000 crore this fiscal
GDP growth estimated at 6.9 per cent in real terms in 2011-12. Slowdown in comparison to preceding two years is primarily due to deceleration in industrial growth.
Headline inflation expected to moderate further in next few months and remain stable thereafter.
An addition of seven more AIIMS like tertiary care centers
India’s GDP growth in 2012-13 expected to be 7.6 per cent +/- 0.25 per cent.
India currently spends about 1 percent of its GDP on healthcare, according to the Organisation for Economic Cooperation and Development. By all accounts, the nation’s public health infrastructure is crumbling–many hospitals are filthy, lacking basic medicines and equipment and filled with dogs and mice.
Still, the only significant healthcare expenditure that Finance Minister Pranab Mukherjee announced was a 15 percent increase in funding for the National Rural Health Mission to 208 billion rupees, or a little more than $4 billion.
National Urban Health Mission is being launched to encompass the primary healthcare needs of people in the urban areas. The Pradhan Mantri Swasthya Suraksha Yojana (PMSSY) aimed at setting up of AIIMS-like institutions and upgradation of existing Government medical colleges is being ex-panded to cover upgradation of 7 more Government medical colleges. It will enhance the availability of affordable tertiary health care.
Unfortunately, the Union budget 2012 – 13 which was announced has shown no positive intervention for the Indian healthcare sector. Services tax increase from 10 to 12 percent will have negative effect on cosmetic medical services, modern spa which are all wellness services. Also increase in excise will have increase in prices of wellness products. Custom duty reduction of some health foods like soy protein and probiotics is a welcome move. It is disappointing to note that similar reduction is not done in other health foods like whey protein based products.
With a shortage of 3.6Mn beds, 1.9Mn doctors & 3.7Mn nurses, the vision of achieving a doctor population ratio of 1:1000 is still a far-fetched reality. Moreover, an increase in-service Tax from 10 percent to 12 percent will result in an additional financial burden to be borne by the end recipient.
However, some of the key elements which were not highlighted by the government in this year’s budget include -
• Granting a healthcare infrastructure status
• Attracting investments in healthcare
• Ensuring insurance growth in social, voluntary &employee segments through various initia-tives
• Positive initiatives to encourage PPP models in Healthcare
In totality, it is imperative to have a combination of both public and private sector strengths teaming together to result in quality healthcare and which is also the only sustainable and inclusive way forward towards achieving improved healthcare delivery outcomes. We hope that the government takes necessary steps to ensure the same in the coming years.
Finance Minister Pranab Mukherjee said India will increase spending on malnutrition programs by 58 percent in fiscal 2012-13 to 158 billion rupees, or about $3 billion.
Included in this new spending is a plan to reorganize the Integrated Child Development Services, the central government-led initiative that has been in charge of the nation’s malnutrition programs, which are run by the states.
Post Budget Reactions
Dr. Sanjeev K Chaudhry, Chief Executive Officer, Super Religare Laboratories
The healthcare delivery sector had significant expectations from the budget, only some of which have been realised in the announcements made by the Hon’ble Finance Minister. The initiatives in respect of exemption of Rs 5,000 for Preventive Health Tests and larger outlay for the National Rural and Urban Health Missions augur well for the diagnostics sector, which plays a key role both in Preventive Health Segments and National Health Screening initiatives.
N. Venkat, Managing Director and CEO, Birla Wellness and Healthcare Pvt. Ltd
There are no major directional and strategic thoughts on health and wellness except in the vaccination programs.
NEW DELHI: Drug prices will rise marginally as the government has raised excise duty both on chemical inputs and finished products in the Budget 2012-13 presented on Friday.
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The duty on finished products (formulations) has been increased from 5 per cent to 6 per cent, while on the active pharmaceutical ingredients (APIs) it has been raised by two per cent to 12 per cent.
Commenting on the development Pfizer Ltd Managing Director Kewal Handa said: "The pharmaceutical industry does not have much to cheer about in this budget. The one per cent increase in excise duty will result in a 1.5 per cent increase in drug price."
"It is ironical that on one side the government is trying to reign in prices of drugs and on the other increasing taxes and duties on drugs," he added.
Dr Reddy's Laboratories chief financial officer Umang Vohra today said the marginal increase in excise duty might make some of the drugs costlier.
"The raise in service tax and excise duty to 12 per cent will lead to some items getting costlier," Vohra said. "The industry wanted a (tax) harmony between active pharmaceutical ingredient (API) and finished dosage for improved cash conversion cycles which it did not get. I think marginally increased excise rates will increase the rate of some drugs in terms of pricing," he said.
However Lupin said that it does not see "any substantial increase in drug prices due to the hike in excise duty from 10 to 12 per cent."
The pharma industry had demanded rationalising the inverted duty structures where formulations were taxed at 5 per cent and API at 10 per cent which for integrated manufacturers results into a cumulative CENVAT.
Vohra also said there was no clarity on provisions that relate to weighted tax deduction on account of research and development (R&D).
By Sanjeev K Chaudhry, CEO, Super Religare Laboratories
The healthcare delivery sector had significant expectations from the Budget, only some of which have been realized in the announcements made by the Finance Minister.
The initiatives in respect of exemption of Rs 5,000 for Preventive Health Tests and larger outlay for the National Rural and Urban Health Missions augur well for the diagnostics sector, which plays a key role both in Preventive Health Segments and National Health Screening initiatives.