Mr Finance Minister, you are wrong about cord blood banking

If the finance minister's intention was to promote cord blood banking, he should have set aside funds to promote public cord blood banks that can create a pool for patients across the country

In all the clamour in Parliament recently -and there has been a lot of it - this bit in the finance minister's vote-on-account speech seems to have gone unchallenged. "(The) ministry of health and family welfare has requested that services provided by cord blood banks are also healthcare services and should be exempt from service tax. I propose to accept the request," Chidambaram read out.

Now, why? Healthcare services are exempt from service tax on the grounds that they serve a larger social good. While cord blood banking, in which blood from the umbilical cord is preserved as a potential source of stem cells, can be considered a healthcare service, the main beneficiary of this would be private cord blood banks. And whether these companies need a waiver needs to be questioned

For one, the benefits of private cord blood banking are limited, despite Aishwarya Rai Bachchan suggesting that parents "preserve the lifesaving gift of umbilical cord" in front-page advertisements. While there certainly is potential in using cord blood for stem cell therapy, private cord blood banking (as opposed to public banks) has been the subject of much debate in the West, as I realised while researching an article last year. In private banking, the depositor has the sole right over the cord blood, which parents are told can be used by the child or an immediate family member. "It is a form of biological insurance," is the usual sales pitch.

But what the sales executive will omit to tell you is that even if your child develops a medical condition that needs a stem cell transplant, it is unlikely that he or she will be able to use the preserved cord blood. Most of the diseases currently treatable with cord blood are blood-related, hence the gene defect causing the ailment would likely be present in the blood you stored. "I have as much chance of using my own cord blood as I have of being struck by lightning," is how Revathi Raj, a consultant paediatric haematologist at Apollo Hospital, put it when interviewed for my article.

The one reason to opt for private cord blood banking is if a parent or sibling of the infant has an illness that can be cured with stem cell therapy and he or she has the identical human leukocyte antigen pattern as the child from whom the cells will be collected. So unless such an exceptional circumstance arises, the decision to privately bank cord blood would benefit none but the companies to which you would be paying Rs 70,000-Rs 1 lakh.

Which brings me to the second issue - will the waiver benefit be passed on to customers at all? Initial reports suggest that the money saved might instead be funnelled towards the companies' already aggressive marketing campaigns. Upamannyue Roy Choudhury, general manager with Cordlife Sciences India, was quoted in The Telegraph as saying the withdrawal would allow the company to "intensify market campaigns to promote this concept". So much for serving public good. This is, of course, setting aside the fact that this "healthcare service" is being peddled to the wealthy and the middle class, hardly a segment that needs a service tax waiver.

In a country like ours where 42 of every 1,000 newborns do not make it past the first year, apart from innumerable other public health challenges, why did the finance minister choose to waive service tax on this niche service, at the expense of other genuine public health issues? What drove the health and family welfare ministry, who I would like to think has bigger priorities, to push for this waiver?

If the finance minister's intention was to promote cord blood banking, which by itself is laudable, he should have set aside funds to promote public cord blood banks, where the donor does not have the rights to the deposited cord blood but a much larger pool is created and made available to the general population, thereby increasing your chances of finding a matching donor (public banks do not charge for collection). With a population as large, diverse and poor as ours, this would seem to be the way forward.

Instead, the only beneficiaries of Chidambaram's decision are likely to be companies resorting to questionable marketing tactics to convince upper middle-class parents to shell out close to a lakh of rupees for a healthcare service that is hardly essential.