Rs 69K cr allocation for health sector, but new cess on imported medical devices a worry

Union Finance Minister Nirmala Sitharaman, on Saturday, announced earmarking upwards of Rs 69,000 crore for the health sector, including Rs 6,400 crore for the Government's favourite family insurance scheme for the underprivileged. But her decision to impose a new cess on imported medical devices remains a source of worry.

The minister proposes to impose a nominal health cess (a new customs duty) on the import of medical equipment with the twin objective of boosting domestic manufacturing in the medical device sector and create health infrastructure for economically poor districts.

“The proceed from this cess shall be used for creating infrastructure for health services in the aspirational districts,” she said in the Lok Sabha while delivering the budget speech.

The announcement worries public health experts. “Since public funding for upgrading district hospitals is proposed through duties on medical devices, caution needs to be exercised to ensure that privately managed public hospitals do not inappropriately overuse devices to generate revenues for their growth through this revenue stream,” cautioned K Srinath Reddy, President, Public Health Foundation of India.

For health care, he pointed out, the government investment was focused on PMJAY (PM's Jan Arogya Yojna that promises a family medical insurance cover of Rs 5 lakh to 10.74 crore poor and marginalised people) with service delivery capacity constraints that had been sought to be addressed through a private public partnership model for upgrading district hospitals.

Compared to the massive jump witnessed in the previous budget, the increase in the Health Ministry's allocation this time is a modest Rs 2,350 crore as against last year's revised estimate of Rs 62,659 crore. The allocations for the department of health research (ICMR) and the Ministry of AYUSH (Ayurveda, Unani, Siddha and Homeopathy) too was raised modestly.

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Sitharaman announced strengthening a new government campaign to end tuberculosis by 2025 and expand the Jan Aushadhi Kendra outlets to all districts offering 2000 generic medicines and 300 surgical items by 2024.

The Swachh Bharat Mission has been given Rs 12,300 crore to keep the open defecation free whereas Rs 11,500 crore has been allocated in 2020-21 for the Jal Jeevan Mission under which piped water would be supplied to every home. If implemented properly, the two missions can significantly reduce disease burden.

“The budget promotes health at the population level through allocations to sanitation, clean water, nutrition and air pollution control programmes. But the overall annual increase in health budget is low when adjusted for inflation. This will not create the momentum needed for a public financing goal of 2.5% of GDP by 2025,” Reddy said.