Budget 2022 | Increase public healthcare expenditure to 3% of GDP, says Bhanu Prakash of Grant Thornton Bharat

As India fights the third wave of COVID-19 pandemic, healthcare sector is back in focus and is likely to be the key area for Finance Minister Nirmala Sitharaman in the upcoming Union Budget. Experts opine that the government should not only increase the public healthcare expenditure, but also focus on expansion of infrastructure in rural areas.

“Health and wellbeing was the first of six pillars in the current year’s Budget and needs to lead the next year as well. In line with the AatmaNirbhar Bharat vision and focus on Availability, Accessibility and Affordability, the government should increase public healthcare expenditure from 1.8% of GDP to 3% over the next few years. Expansion of physical & digital healthcare infrastructure, particularly in rural areas, along with an increase in vaccination budget should be a priority," said Bhanu Prakash Kalmath SJ – Partner and Pharma & Healthcare Sector Leader at Grant Thornton Bharat.

In the previous year's Budget, healthcare sector came up as a major winner. Giving top priority to health and well-being, the government increased the allocation to the sector by a whooping 137 percent to Rs 2.23 lakh crore.

"Encouraging public-private partnerships, offering beneficial tax rates and weighted tax deduction to attract investments are also some desired expectations. Incentivise development of technology to improve access and reduce delivery costs, and consider moving healthcare to zero-rated GST regime. Enhance exemption limits under Chapter VI A of Income Tax Act, promote preventive healthcare and introduce co-pay-based insurance for middle-income groups to ease out-of-pocket expenditure. Capacity-building measures across medical and nursing streams are also needed," Bhanu Prakash added.

Since March 2020, the COVID-19 outbreak has rattled the country's economy and the healthcare sector. It may be recalled, due to the shortage of ICU beds, oxygen cylinders and ventilators, the healthcare sector came under severe pressure especially during the deadlier second wave.

While the Omicron variant is not as severe, it is more contagious than the original virus. Providing a booster dose against the new variant when a notable population has not been fully vaccinated, poses a huge challenge for the Asia's third largest economy.