Budget 2018: Expect increase in better healthcare facilities

With the Union Budget just two days away, credit rating agency ICRA has given its view on the expectations that the healthcare sector would look forward to on February 1.

The public-sector investment on healthcare accounts for less than 1.5 percent of GDP, which is one of the lowest globally, and the government intends to increase the expenditure to 2.5 percent of GDP by 2025.

The outlay on the healthcare increased by a healthy ~28 percent in the Budget for the financial year 2017-18 and the allocation is likely to see similar increase in the forthcoming Budget as well.

In line with National Health Policy (NHP) 2017, the expenditure is likely to be directed towards setting up of new hospitals to increase the number of beds in the country, for transformation of existing district and town-level health centers to provide better healthcare facilities across geographies while using the existing infrastructure.

The Budget is also likely to increase the allocation for addressing the increasing burden of non-communicable diseases (NCDs) such as diabetes, cardiovascular diseases, hypertension etc. and to increase the outlay for providing free drugs, diagnostics and emergency services across all public hospitals, in line with NHP 2017.

Public sector accounts for only ~30 percent of the total healthcare expenditure in the country compared to ~42-58 percent in Brazil, ~58 percent in China, ~52 percent in Russia, ~50 percent in South Africa, ~48 percent in USA and ~83 percent in the UK (Source: WHO).

As per ICRA, investing in building and maintaining public health infrastructure should be given priority in the Budget as these facilities are lagging and a major portion of the population has to incur out-of-pocket expenditure on healthcare due to low penetration of health insurance.

Besides setting up new hospitals, medical colleges and nursing academies are also required to be set up to address the shortage of beds and skilled medical professionals in the country.

Given the paucity of beds in the country, higher tax incentives for private-sector investments in modernising medical facilities and developing green field hospitals will be a welcome step. New infrastructure developed through incentives can also be utilised for catering to the growing medical tourism in the country, which is expected to continue to grow by ~20 percent over the next five years, generating export revenues and employment.