Budget 2020 : What are the expectations of Healthcare Industry ? The healthcare spending may increase to 2.5% of the GDP by 2025. Budget 2020-21 will be presented on February 1.

Meena Ganesh, MD & CEO, Portea Medical, India’s leading consumer healthcare brand:

India has one of the lowest spending on healthcare globally. While it was stated that the country is set to increase the healthcare spending to 2.5% of the GDP by 2025, it continues to stand at 1%. We hope to see some action around this in the upcoming budget.” A major focus must be given to the home healthcare industry which is one of the ways to realize the government’s vision of affordable healthcare for all. However, current taxation policies and regulations do not cover home healthcare and diagnostic tests and other at-home aspects still form a large part of people’s out of pocket expenses. Home healthcare is not recognized as a mainstream sector and should be brought under the ambit of governmental schemes like the Ayushman Bharat yojna”.

We also expect to see an increase in the limits on reimbursement of expenses on diagnostics, preventive health check-ups, etc. and for home healthcare to be made a part of this exemption. Critical healthcare equipment such as ventilators, wheelchairs, crutches, and medical equipment spare parts should be exempted from GST. This will help make quality healthcare more accessible.While it is encouraging that steps have been taken to register services like elder care homes and home care agencies for provision of care to elderly, the real challenge is in terms of lack of facilities. Add to this is the cost of elder care and complete non-availability of insurance.

 Amit Choudhary, Founder & CEO, Dawaa Dost:

The government had pushed for affordable and accessible healthcare in its last term, and we hope that this year’s budget will also have some concrete action plans to realize this vision. Innovative, tech-based, large-scale and affordable healthcare solutions are the need of the hour in India and the healthcare sectors expectations from Budget also revolve around the same.We hope the government will simplify regulations for pharmacies buying medicines from GST paid channels. There should be 100% input credit for such entities and the working capital must be freed even under circumstances where the manufacturer or authorized distributor have erred on paying the deposit.

The retailer has no recourse to anyone else nor the margins to absorb the entire GST as is the case today. We also hope the government will consider offering income tax breaks to affordable medicine providers like Dawaa Dost as this will make them more accessible to the masses. There can be specific provisions for the creation of a sunrise industry for providing income tax subsidies for hiring new talent from a PF contribution standpoint, accelerated depreciation on stores, and subsidy on technology development via grants. There is a huge opportunity in terms of building a new industry and the need of the hour is for government support like the one provided to the IT sector two decades back.

Neha Rastogi, Founder and COO-Agatsa, Innovator of world’s smallest  ECG machine:

The start-up ecosystem in India is thriving thanks to some conducive government policies announced in the last budget. Given this, startups in all sectors including those focusing on healthcare and health tech innovation are going to witness rapid growth in the years ahead. However, the issue that needs to be addressed at the outset is India’s current healthcare infrastructure and allotted budget which are not adequate to ensure universal healthcare services to all. This is where innovations in medical devices and services come into picture and we hope the budget will focus on this aspect. A growing number of tech-enabled companies like Agatsa are stepping in to provide specialized healthcare monitoring solutions through portable devices using cutting edge technology. The healthcare sectors expectations from Budget therefore is to provide adequate funding and support to fuel further innovations under the Make in India and Digital India campaigns.

While the market for healthcare startups and digital healthcare devices is robust, we also need more support from the government to promote indigenous innovations and provide an impetus to domestic device manufacturers. We would like to see the government procure more Indian products from the market so that our dependency on foreign imports can be brought down to a minimum. This will not only boost the Indian startup niche but also make healthcare services more affordable for the common people.

 Vikas Bagaria, Founder, Pee Safe, India’s premium sanitation and personal care brand:

The femtech industry has a huge potential and is expected to reach $50 billion globally by 2025, as per estimates by Frost and Sullivan. Though this is a relatively new industry, it aims to address some of the age-old problems women have been facing and is projected to be the next big thing in the women’s health and hygiene market.  It promotes the use of digital health applications such as hygiene products, diagnostics, reproductive health monitoring systems, etc. to help women take control of their health.

Given this, our expectation from the budget 2020 centres around government policy and regulation to enable ease of doing business through centralized policies. This will also attract more foreign investment opportunities in the segment. There is also a need to simplify the taxation process and make early stage funding easier. While the government has done well in terms of facilitating foreign investments in India, this outlook needs to be maintained going forward to effectively promote more innovations under the Make in India campaign. Even though there is immense potential, the investor confidence in the Indian femtech industry is still considerably low – and the healthcare sectors expectations is the policies to be announced in the budget ahead will be an enabler.

Sarvesh Shashi, Founder, SARVA, India’s fastest growing yoga and wellness ecosystem

Data from the World Economic Forum indicates that over 77% of Indians will be under the age of 45 by the next decade. However, despite being one of the youngest countries, we are also the most unfit with estimates suggesting that 1 in every 3 Indians are medically unfit and suffer from preventable lifestyle disorders. In the last five years, the government has exhibited a keen interest in the revival of Yoga. The hon’ble prime minister has personally taken a lot of interest in positioning Yoga as a universal exercise that can help people stay fit, look good and be healthy.

While these have been welcome and have helped encourage players like SARVA who are ensuring that there is a more organized and holistic approach to the concept of yoga, we still have a long way to go. Preventive health and wellness is the need of the hour for each given the high instances of disease and lifestyle-induced illnesses in our country. In order for holistic health to be made more attractive to consumers, it is important that the tax component on commercially-run Yoga practices and institutes be revisited since yoga can help address chronic medical ailments and fill the gaps in traditional healthcare.

Under section 80D of the Income Tax Act of 1961, taxpayers can claim tax deductions on health checkups and health premiums; preventive wellness, however, is still placed under a high tax bracket. This year however the healthcare sectors expectations from Budget is that it may provide tax deductions to those getting back to good health after falling sick but also supports and incentivize those who take care of their own fitness. This could potentially include fitness services such as memberships to gyms, fitness studios, commercially-run yoga centers, etc. 

Mr. Takashi Maki San, Managing Director – Sakra World Hospital :

Mr. Takashi Maki San, Managing Director – Sakra World Hospital says, “The increased spending on healthcare is a welcome step. Now, we look forward to increasing FDI and larger Public-Private Partnership (PPP) to make healthcare more accessible to everyone. The increased investments and partnerships will also bring in latest technologies, making healthcare affordable.”

Dr Kalpana Apte, CAG-Pratigya Campaign for Gender Equality and Safe Abortion and Secretary General, FPA India:

Dr Kalpana Apte, CAG-Pratigya Campaign for Gender Equality and Safe Abortion and Secretary General, FPA India says, “India’s public expenditure on health now stands at 1.28 per cent of the GDP and is way lower than the average expenditure by countries clubbed as among the “poorest” in the world, namely South-East Asian countries such as Nepal, Sri Lanka,  Thailand etc. Furthermore, many public health specialists have expressed disappointment over the Centre’s pledge to invest 2.5 per cent of its GDP into healthcare by 2025, when the global average will be about 6 per cent.”

For strengthening the infrastructure and manpower requirements of the health system, there is an immediate need to increase the allocation for health expenditure need to be raised to atleast 2.5%-3.5% of the GDP. Hence, it is important to establish quality health care services across the country, and increase investments in sexual and reproductive health, while also bringing about focus to contraceptive and safe abortion access in particular by expanding the provider base and prioritizing women’s health, which will have positive impact on the overall health of the country.

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• With a majority in Lok Sabha, the Modi Government can amend the constitution to make health a fundamental human right (on the same grounds like the 1948 WHO Constitution) and commit to ensuring the highest attainable level of health for all. This will be historic step for India.
• Priority sector status must be accorded to the healthcare industry. This will ensure availability of funds at minimal interest rates which will encourage new private players as well as old ones to expand in the tier III / IV cities and even in the rural country side.
• A separate bureaucratic cadre christened as “Indian Healthcare Services” on lines like IAS should be established to ensure that Health gets the highest priority.
• We need a multi-pronged approach from the government to strengthen and reform the healthcare sector in India. On the one hand, it involves improving the state of public healthcare by increasing budgetary allocation, establishing more Medical/Paramedical/Pharmacy/Nursing colleges and improving primary healthcare facilities.
• On the other hand, it involves measures to enable the private sector spread its presence beyond the urban population. This will help in improving accessibility for secondary and tertiary care in tier 2/3 towns and rural areas. For the latter to happen, the government must offer major incentives and tax breaks to private healthcare organizations setting shop in non-urban areas. These incentives can include income tax breaks for first five years of operations, help in procuring land, making medical equipment GST free for such hospitals and relaxation on service tax on hospital inputs.
• Similarly, establishing a mechanism to offer fund support or subsidization in treatment cost to private hospitals in smaller towns and rural areas can go a long way in bridging the accessibility gap. This will also help generate jobs and make quality healthcare more accessible.
• Home and Ambulatory Healthcare should be recognized as a separate sub-sector of Healthcare as it forms the backbone of primary healthcare and addresses lack of adequate hospital beds especially for rural areas. This should also include increased tax incentives for preventive health checkups under 80D.
• Allowing FDI in E-pharmacy sector and recognition of E-pharmacies under Drugs and Cosmetics Act is another impending reform.
• The government’s flagship scheme Ayushman Bharat PMJAY, in its first year, has managed to empanel over 15,000 hospitals. Currently only 3.57 crore families of the original 10.74 crore families have been issued golden cards, and this number is expected to go up significantly this year. The government will therefore need to substantially increase its previous year’s allocation of INR 6000 crore as it attempts to expand the scheme’s footprint this year and eventually merge it in the long run with other schemes such as ECHS, ESI, and CGHS.
• The government must consider credit guarantee for hospitals under PMJAY and other Government insurance schemes, since payments take time to come to the hospital. The government should incentivize /give credit guarantee to lenders who are willing to fund the receivables.
• To stimulate the growth of indigenous medical devices manufacturing in India, issues specific to the medical devices industry needs to be addressed. Some of them include-

• Unfavourable duty structure: An unfavourable duty structure in many segments/sub-segments make imports cheaper than manufacturing in India.

Lack of comprehensive laws and lax enforcement mechanisms for IP protection:

IP protection for novel technology is critical for the success of global medical devices players investing outside their home market. In the absence of enforceable IP laws, global players would lack confidence to invest in manufacturing assets, thus limiting India manufacturing.

Ease of doing business:

India still lags behind most countries in terms of ease of doing business. Due to complex regulatory requirements, products currently require multiple agency approvals. This leads to time delays at multiple layers, at both the national and state levels.

Limited availability of skilled workforce and restrictive labour laws:

Despite sufficient human capital, there are unfavourable labour laws and limited trained workforce in India to install operate, repair and service equipment.

 Inadequate ecosystem support (suppliers, raw material etc.) for medical device manufacturing:

• Medical Technology can bridge the distance between the care provider and the patient thereby helping patients in remote areas access specialist and specialized equipment present in large cities far away. Technological advancements in the fields of health monitoring and diagnostics can help in detecting health issues early on thereby reducing overall cost of care and enhancing wellness levels of the society. Similarly, technological interventions are rapidly increasing the precision and efficacy of treatment modalities thereby improving clinical outcomes. However, to realize this opportunity at scale rather than as isolated, fragmented initiatives, both the government and the industry will need to make concerted efforts.Some of the key areas where government could intervene include:
•  Setting up an independent authority for medical devices and enabling faster grant of patents
•  Supporting local demand of medical devices through public health and health insurance programs as well as by collaborating with the private sector through PPP models
• Providing relevant financial incentives for the industry
•  Supporting innovation in India by providing capital and infrastructure

Support to MedTech start-ups:

• In addition, as the road map for medical devices manufacturing is charted, learning that created growth trajectories of other industries can be adopted:
• Liberalization and opening up of markets
• Policy reforms (ease of doing business)
• Financial and non-financial incentives (in terms of import duty, export duty, SEZs)
• Designing comprehensive laws and a robust regulatory environment for high IP industries
• Government expenditure to initiate ecosystem Development
• Government should also come up with medical innovation fund separately to boost health tech start-ups.

Other issues to be addressed by the Government include–

• Allocation of funds for improving the school infrastructure to ensure hygienic and healthy school environment, improved meal experience, clean hand wash and sanitation facilities. The Government must focus on the convergence of drinking and potable water schemes of the Jal Shakti Ministry with the Mid-Day Meal Programme by earmarking the budget for the scheme.
• The Government must make budgetary allocations for monitoring the growth and development of all the children in Primary and Upper Primary Schools and set up a parallel linkage with the National Health Mission in cases of referrals. We are also hopeful that the MDM Programme will be aligned with the parameters of POSHAN Abhiyan to address child malnutrition using various interventions.
• Life saving equipment such as ventilators, BIPAP and CPAP, etc. have been placed under heavy taxes. Even something as basic as crutches and wheelchairs have been put under the 5% to 7.5% GST bracket. These are essentials and should not have been taxed. It is perplexing to see how the medical equipment spare parts are being taxed under the highest slot of 28% GST. This is highly debilitating for the healthcare industry. There should be a critical evaluation of the situation and that there should be serious thought given to make healthcare essential equipment tax free.  
• AI has the potential to solve many problems of Healthcare Delivery in the country. Access to large volumes of quality data is vital for the success of AI. More budget allocation towards R&D in medical device innovation and digitization of care delivery process through right investment in tools, infrastructure and training will help us to meet some of the challenges in the Healthcare Industry.
• The government should accord due recognition to the emergency medical services (EMS) industry and recognise it as an independent sector within the healthcare industry. 90% of the EMS space is controlled by the government. The sector is in urgent need of impetus in the form of budgetary allocation of funds so that even the remotest parts of the country have access to timely quality medical care. There is a severe demand supply gap when it comes to the availability of ambulances in India with the ratio of ambulances per capita pegged at 1:146249. We need to move to a ratio of 1:60000 and this can only happen if the government incentivises the industry in the form of subsidies. The government should also invest in setting up skill centres for training paramedics and emergency medical technicians. While the government is already taking steps to improve road connectivity, we believe the government should look at increasing the accessibility of emergency medical services through station ambulance services on national highways and medical units on trains.
• Globally there is acceptance of the growing significance of molecular genetics in diagnosis as well as clinical management of various cancers. The government should help create a regulatory environment extremely conducive for promoting research in the field of cancer genetics by creating a hub for cancer research. Quality research in cancer genetics will go a long way in making new therapies available to Indian patients at very affordable costs.
• The Indian Pharmaceutical industry is a sunrise industry with a competitive advantage for India. We should leverage India’s position by unleashing entrepreneurial spirit through policy stability and ecosystem.
• There is an utter need to spread awareness amongst the masses to promote health insurance which has become a must considering the current healthcare cost in the country. Enhancing the tax rebate under Section 80D from the current value of Rs. 25, 000 to Rs. 1,50, 000 can be a great move by the government. Under this year’s budget, the government must waive off the GST charges which are currently 18% on health insurance premiums.
• Another expectation in this year’s budget is giving the consumers ability to pay level premiums to 5 years with multiple payment modes as available in other insurance industries like Life Insurance. The payment methods can be extended to monthly, quarterly, half-yearly, and limited pay in order to make the premium payment process convenient for the consumers. This will surely make Healthcare in India affordable and accessible.
• Currently, the health insurance industry in India has a long gestation period and it takes a long time for the insurers to achieve a break-even. As per the industry experts, the limit of eight years for carry forward and set-off of business losses is not sufficient. This limit must be increased.

India is the second most populous country in the world. The  death rate has declined but birth rates continue to be high in most of the states. Health care structure in the country is over-burdened by increasing population. Family planning programs need to be (re)activated by the Government.

To boost Quality in Healthcare, the Government must incentivize organizations who have NABH Accreditation; it could be in terms of tax benefits, GST benefits, Local self governments tax benefits like property tax, assessment tax, etc.The Government of India has already made a robust policy and template for PPP investments in infrastructure projects. Similarly, it must give the Healthcare sector projects through the PPP route a boost through a structured policy and templates to cut red tape and quicker implementation of PPP projects in healthcare.

Dr Rajeev Boudhankar

PhD, (BITS-Pilani),MD(Bom), MPhil(BITS-Pilani), DHA(TISS),MCPS(Bom).

Advisor-Mentor, Hira Mongi Navneet Hospital, Mumbai

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