'Fall in public healthcare outlay as percentage of GDP'

'Fall in public healthcare outlay as percentage of GDP'

(Representative Image/iStock image)

By Shubham Jain

"At Rs. 67,484 crore, the budgetary allocation for healthcare sector for FY2021 will translate into modest 5.7% increase vis-a-vis revised estimate of Rs. 63,830 crore for FY2020. With a nominal estimated GDP growth of 10%, this also translates into a fall in the public healthcare expenditure as a percentage of GDP. Thus, the public sector spend on healthcare will continue to lag, at below ~1.5% of GDP. Also, the increase in healthcare spend was a healthy ~15% in the previous budget and the current allocation is much below expectations.  

Nonetheless, the proposal to set up hospitals in PPP mode in 112 districts is likely to encourage  the much-needed investments in the sector. This, coupled with the focus on increasing the empanelment of hospitals will also provide thrust to Ayushman Bharat scheme. Furthermore, the proposed viability gap funding for setting up medical colleges adjacent to the existing district hospitals will help address the shortage of skilled medical professionals.

Though the health cess of 5% on import of medical equipment’s will augment resources for funding of expenditure on healthcare sector, the hike will increase the cost of equipments, which is a near term negative for the players."

(The writer is the Group Head & Senior Vice President of Corporate Ratings at ICRA Ltd. )


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