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Union Budget 2021: Healthcare spending boost led by COVID-19 vaccination, drinking water, sanitation

The increase was primarily led by Rs 35,000 crore allotment for COVID-19 vaccines and Rs 21,158 crore allocation to drinking water and sanitation. In addition to Finance Commission (FC) Grants of Rs 13,192 crore for health and Rs 36,022 crore for water and sanitation.

February 01, 2021 / 07:47 PM IST
A healthcare worker receives a dose of Covishield, a COVID-19 vaccine manufactured by Serum Institute of India, at a government-run hospital at Baruipur on the outskirts of Kolkata. (Image: Reuters)

A healthcare worker receives a dose of Covishield, a COVID-19 vaccine manufactured by Serum Institute of India, at a government-run hospital at Baruipur on the outskirts of Kolkata. (Image: Reuters)

 
 
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Finance Minister (FM) Nirmala Sitharaman on February 1 announced a budget outlay of Rs 223,846 crore for health and wellbeing in the Budget 2021.

This was an increase of 137 percent compared to the outlay on healthcare was Rs 94,452 crore in 2020.

What led to the increase?

The increase was primarily led by Rs 35,000 crore allotment for COVID-19 vaccines and Rs 21,158 crore allocation to drinking water and sanitation. In addition to Finance Commission (FC) Grants of Rs 13,192 crore for health and Rs 36,022 crore for water and sanitation. The FC Grants in the Union Budget provides funds to local bodies, state disaster relief funds and compensates any revenue loss to states after devolution of taxes.

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COVID-19 Vaccine

Frequently Asked Questions

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How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

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Beyond headline number

Beyond the headline number,  the actual allotment for the Ministry of Health and Family Welfare, the implementing agency of all health schemes has increased 9.6 percent to Rs 71,269 crore. The proposed allocation to Ayushman Bharat remained flat at Rs 6,400 crore this year, same as the amount set in last year's Budget before it was revised downward to Rs 3,100 crore.

National Health Mission that covers most of the government health initiatives that includes immunisation, primary healthcare, various diseases control programme, capacity building, among others, has seen an increase of 9.5 percent to Rs 36,570.5 crore.

New scheme to enhance pandemic preparedness

The FM also announced a new scheme called the PM Atmanirbhar Swasth Bharat Yojana for boosting the primary, secondary and tertiary healthcare, with budget outlay of Rs 64,180 crore spread over six years.

This funding would be used to develop capacities of health care systems, develop institutions for detection & cure of new and emerging diseases.

The FM said the scheme will support over 17,788 rural and over 11,024 urban health and wellness centres. Health labs will be set up in all districts and 3,382 block public health units in 11 states. Establishment of critical care blocks will be created in many public hospitals. in 602 districts and 12 central institutions.

The government will set up 15 Health Emergency Operation Centers and 2 mobile hospitals. The government will set up a national institution for One Health, a Regional Research Platform for WHO South East Asia Region, 9 Bio-Safety Level III laboratories and 4 regional National Institutes for Virology.

“The total allocation to healthcare is a sizeable sum of Rs 2.23 lakh crore including COVID-19 vaccination expenditure currently budgeted at Rs 35,000 crore, the sector should get a good boost. Another notable part of the allocation is the thrust on water and sanitation, the allocation for these two itself exceeds last year’s total budget and is a welcome step in addressing the root cause and taking preventive measure," said Rajiv Bajoria, Partner, Deloitte India

"As India's healthcare spend has historically been very low, it is hoped that the present allocations mark a beginning of a strong focus to this sector,” Bajoria said.

The government said it is committed to increase the spend on healthcare to 2.5 percent of GDP by 2025.

The government spending on healthcare is expected to increase from 1.5 percent in FY20 budget to 1.8 percent in FY21 budget, with the increase in spend.

21 A sickly pace

 

But other experts like Kapil Banga, Assistant Vice President at rating agency ICRA said excluding vaccines, the budgetary allocation for healthcare sector for FY2022 will translate into 10 percent drop in the allocation, if compared to the revised estimates (RE) for FY2021, nonetheless, the allocation translates to growth of 11%, if it is compared to the budget estimates (BE) for FY2021.


"However, as the total allocation towards the healthcare sector has come down vis-a-vis RE for FY2021, this could translate into cutting of expenditure on other avenues within the sector," Banga said.


"The continuing modest allocation towards the healthcare sector would make it challenging for the Government to meet its target of public sector healthcare investment of 2.5% of the GDP by 2025," Banga added.

The government has earlier announced that it will foot the entire bill of the vaccination for 3 crore healthcare and frontline workers. There was talk about imposing possible Covid cess to fund the remainder of COVID-19 vaccination rollout,  but the FM didn't take that route.

"An adequate budgetary provision for the vaccine rollout will boost the confidence of the economic agents, and aid in their decision-making regarding both consumption and investment," rating agency ICRA said in its pre-budget note.

 
Viswanath Pilla is a business journalist with 14 years of reporting experience. Based in Mumbai, Pilla covers pharma, healthcare and infrastructure sectors for Moneycontrol.
first published: Feb 1, 2021 03:36 pm

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