Mr. Pranab Mukherjee presented the budget for 2010-11 today. The budget has generally been welcomed by industry for being growth oriented. The stock market has also given the budget a thumbs-up with a modest 1.3% increase in line with the average increase in Budget days in the previous ten years. Increase in fuel prices which may have an inflationary impact and increase in Minimum Alternate Tax from 15% to 18% are the discordant notes in a otherwise positive budget.
So what are the implications of Budget 2010 for the Health Sector - here is a summary
Public Health
Increase in allocation for Ministry of Health and Family Welfare from Rs.19,535 Crores to Rs. 22,300 Crores marking an increase of 14% from previous budget is a welcome development. The increase has been in line with increase in outlays in previous budgets
Pharmaceuticals
Increase in the limit for weighted deduction for expenditure incurred on in-house R&D from 150% to 200% should incentivize increased R&D spending
Medical Equipment
Removal of multiple slabs for import duties on medical equipment is a welcome development. All medical equipment are now to be subject to a uniform 5% basic customs duty and 4% countervailing duty and complete exemption from special additional duty. Spares and accessories for manufacture of equipment will attract 5% duty with no countervailing duty and no special additional duty. Medical equipment industry will grow faster under this simplified duty structure. End user prices of some medical devices and equipment could also fall as a result of simplification of import duties
Existing duty exemptions for assistive and rehabilitative devices will be retained.
Import duty exemption on specified materials for orthopaedic implants will remove an anomaly and should reduce the end user price of the implants
Health Insurance
Expanded coverage for Rashtriya Swasthya Bima Yojana to include all families which are part of NREGA and performed at least 15 days work in FY 2010 is welcome as catastrophic medical expenses are a significant cause for poverty in India
Contributions to Central Government Health Scheme will be treated similar to other health insurance schemes for income tax purposes under Section 80D
The Disappointments
Private Healthcare Providers would however rue the fact that their repeated demands for infrastructure / priority sector status has not been granted by the Finance Minister. Requests for extensions of the time period for Tax Holidays for healthcare investments in Tier II and Tier III cities has also not been granted
In the balance a good budget for the healthcare sector !
Friday, February 26, 2010
Tuesday, February 23, 2010
Budget 2010 : Great Expectations
Its Budget Time in India this week with the Railway Budget scheduled for presentation on February 24 and the Annual Budget on February 26 - it is also the time for great expectations from all sections of society and the healthcare ecosystem is no exception !
On the Public Health front, there is pressure on the Finance Minister to enhance the outlay for the National Rural Health Mission (NRHM). There is also talk of the need to expand the coverage under the NRHM to all states in India from the existing 18 states with poor health indicators. There is also talk of the need to expand the Health Mission to urban areas as well to create a National Universal Health Mission
The Private Healthcare Providers have been clamouring for an "industry" or "priority sector" status to healthcare. There are requests for increasing the duration of tax holiday for healthcare investments in Tier II and Tier III cities first introduced in Budget 2008 from the existing 5 years to 10 years to make healthcare projects more viable
The Pharma industry has been requesting for tax incentives towards expenditure incurred on R&D as well as inclusion of costs associated with activities like clinical trials, product filing, registration under the ambit of "R&D" activities. Simplifying transfer pricing and inclusion of more drugs under the category of life saving drugs have also been requests from the pharma industry
The Medical Equipment industry would like to see an impetus to indigenous manufacture and withdrawal of the perverse incentives which have prevented the growth of the domestic medical equipment manufacture.
There are also expectations that limits for medical expenditure allowed for tax purposes will be increased from the Rs. 15000 level that was fixed a decade ago.
Tempering all these expectations is the hard reality of a burgeoning fiscal deficit which at 6.8% of GDP is way above the target value of 3% for 2009-10 defined under the Fiscal Responsility and Budget Management Act.
Budget preparation is a tough balancing act even in the best of economic environments - more so under the current challenging times
How will Pranab-da respond ? We'll come to know on 26th February !
On the Public Health front, there is pressure on the Finance Minister to enhance the outlay for the National Rural Health Mission (NRHM). There is also talk of the need to expand the coverage under the NRHM to all states in India from the existing 18 states with poor health indicators. There is also talk of the need to expand the Health Mission to urban areas as well to create a National Universal Health Mission
The Private Healthcare Providers have been clamouring for an "industry" or "priority sector" status to healthcare. There are requests for increasing the duration of tax holiday for healthcare investments in Tier II and Tier III cities first introduced in Budget 2008 from the existing 5 years to 10 years to make healthcare projects more viable
The Pharma industry has been requesting for tax incentives towards expenditure incurred on R&D as well as inclusion of costs associated with activities like clinical trials, product filing, registration under the ambit of "R&D" activities. Simplifying transfer pricing and inclusion of more drugs under the category of life saving drugs have also been requests from the pharma industry
The Medical Equipment industry would like to see an impetus to indigenous manufacture and withdrawal of the perverse incentives which have prevented the growth of the domestic medical equipment manufacture.
There are also expectations that limits for medical expenditure allowed for tax purposes will be increased from the Rs. 15000 level that was fixed a decade ago.
Tempering all these expectations is the hard reality of a burgeoning fiscal deficit which at 6.8% of GDP is way above the target value of 3% for 2009-10 defined under the Fiscal Responsility and Budget Management Act.
Budget preparation is a tough balancing act even in the best of economic environments - more so under the current challenging times
How will Pranab-da respond ? We'll come to know on 26th February !
Tee-off
Healthcare is one of the fastest growing sectors in India today. Buoyed by a growing economy and enhanced disposable incomes , demand for healthcare services has been growing steadily over the past few years. New corporate hospitals have sprung up all over India offering the latest in diagnosis and therapy. Public investments in healthcare have also shown an increase after years of sub-optimal funding. These are exciting times for the Healthcare Industry in India - this blog is my take on the challenges and solutions for Indian Healthcare
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