BUDGET EXPECTATIONS: HEALTHCARE & PHARMACEUTICALS

17 Jan 2023 , 09:10 AM

At Rs. 866.1 billion, the budgetary allocation for the healthcare sector in FY2023 translated into a YoY increase of 0.8%, compared to the revised estimates of Rs. 859.2 billion for FY2022. The outlay for vaccinations was reduced to Rs. 50 billion in FY2023 against Rs. 390 billion, as per the revised estimates for FY2022. The allocation to healthcare as a percentage of GDP continues to be lower for India against most developing nations. Higher allocation is also necessitated to enable the Government to achieve its target spend of 2.5% of GDP on healthcare by CY2025 compared to the sub 1.5% currently.

Incentives to promote private sector investments (both greenfield and brownfield expansions) to improve the penetration of healthcare facilities in both urban and rural areas will be a welcome step. Further, given the low doctors to people and nurses to people ratio and the increasing opportunities available to people outside India in the medical field, increased allocation towards training medical personnel is also a key requirement.

Being research-intensive, the pharma sector incurs significant spend on R&D. Providing fiscal (higher tax deductions) and non-fiscal incentives for R&D expenses will support higher investments in developing new drugs. Investments in novel and specialty drugs are subject to higher risk of failure, leading to risk averseness. Higher tax incentives for R&D spends will incentivise Indian players to spend more, thereby providing impetus to newer research initiatives.