Budget Action & Reaction

Budget expectation 2021: Ishiqa Multani , President, Sagar Group of Hospitals

The promise of a “never before” Union Budget by finance minister Nirmala Sitharaman raises hopes and expectations for a strong post-pandemic recovery. As the nation looks for economic stimulus amidst the backdrop of nationwide Covid-19 vaccinations, one sector, in particular, will be watched with keen interest and hope: healthcare.

The unprecedented Covid-19 pandemic has impacted more than 1 crore Indians already and heavily stressed the Indian healthcare systems since March 2020. Consistently low budget allocations (about 2% for 2020-2021) that have fallen short of the target spending of 2.5% of GDP (National Health Policy, 2017) have already provided a reality check on the Indian healthcare system and infrastructure. In the light of this aftermath, greater investment in health is critical for improving infrastructure, making the country safer, and making health expenditure more predictable.


Though all goals may not be achieved in a single budget, the central government should be looking to spend much closer to the global average healthcare budget  (8% of GDP) and aim for at least 5%-8% of GDP in Budget 2021.

First, the immediate needs of managing the Covid-19 pandemic and the nationwide vaccination drives must be addressed. Vaccinating even 50% of India’s population at a negotiated rate of Rs. 400 per person (Rs. 200 per dose) will incur a cost of approximately Rs. 27,000 crores. Considering that the budget allocation for 2020-2021 was Rs. 69,000 crores, the estimated vaccination cost itself will require a 40% increase in allocation.

Expenditure will also be required to shore up the healthcare infrastructure. India currently has 7 beds per 10,000 population as compared to the global average of 27 beds per 10,000 population. In addition to the Public-Private Partnership (PPP) model and viability gap funding (VGF) for the growth of healthcare infrastructure, tax benefits will be anticipated for private sector investments to develop greenfield hospitals and upgrade diagnostic services and medical facilities. Efforts for the effective implementation of the Ayushman Bharat (AB-PMJAY) scheme will also benefit from increased budgetary support to the RSBY scheme and tax incentives for hospitals in Tier II and III cities and in rural areas.

In order to help healthcare providers improve the skills and expertise of the healthcare workforce, it is recommended that all government hospitals start DNB programs and a major tax deduction be offered to private hospitals providing DNB courses for increased participation.

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