You are here: Home » Economy & Policy » News
Business Standard

Mixed reactions in health care sector

Rs 500 crore proposed for setting up of four new AIIMS

BS Reporter  |  Mumbai 

Even as Finance Minister Arun Jaitley announced populist measures like setting up of four new All India Institute of Medical Sciences (AIIMS), 12 more government medical colleges and prioritisation of free drug and diagnosis services, Budget 2014-15 failed to woo those eyeing a higher health care spend and private investment opportunities in areas such as clinical trials and drug research.

While the government has taken up measures to promote research on local health issues concerning the rural population by proposing to set up 15 Model Rural Health Research, clinical research organisations testing new drugs on human subjects might now have to pay service tax, with the exemption proposed to be withdrawn.

  • 4 AIIMS with a proposed investment of Rs 500 crore
  • 12 more government medical colleges
  • 2 National Institutes of Ageing to be set up at AIIMS, New Delhi & Madras Medical College
  • 15 Model Rural Health Research to be set up
  • New drug testing laboratories to be set up across states
  • Proposed to strengthen biotech clusters
  • Tax exemption withdrawn on technical testing of new drugs on humans
  • Proposed investment allowance linked to the new investments in plant and machinery

“There was hope of the government increasing health expenditure closer to 2.5 per cent of gross domestic product, as well as of announcing initiatives that would encourage private investments aimed at improving health care availability in underserved areas,” said Charu Sehgal, senior director, Deloitte.

However, sector officials and analysts have welcomed the initiatives to increase health care accessibility and boost growth in the manufacturing sector, which might benefit generic drug producers.

Jaitley proposed to allocate Rs 500 crore for setting up of four new AIIMS, in Andhra, West Bengal, Vidarbha in Maharashtra and Poorvanchal in Uttar Pradesh. This will take the total number of AIIMS to 11 from the seven currently functional, including the one in Delhi. The proposed investment allowance linked to the new investments in plant and machinery are also likely to benefit pharmaceutical companies, especially medium and small scale enterprises. Domestic drug makers have been facing troubles in international markets mainly for their manufacturing practices.

The government also proposed to strengthen biotech clusters. It has also hinted at supporting Special Economic Zones, of significance for pharma companies as most of the industry is export-oriented.

A greater coordination between the Centre and states is also visible in the Budget. For the first time, central assistance is proposed to strengthen states’ drug regulatory and food regulatory systems, by creating new drug testing labs and strengthening the 31 existing ones.

It is also proposed to add 12 government medical colleges, apart from the 58 approved. All government hospitals will now have dental facilities.

Besides, the plan is to set up two national institutes of ageing each, at AIIMS, New Delhi and Madras Medical College, Chennai. A national level research and referral institute for higher dental studies would also be set up in one of the existing dental institutions.

First Published: Fri, July 11 2014. 00:42 IST