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Budget 2020 | Healthcare spending sees marginal rise, govt focuses on healthcare infra in small towns

Allocation for Ayushman Bharat scheme remained flat at Rs 6,400 crore.

February 01, 2020 / 09:51 PM IST

The allocation for healthcare sector has seen a modest rise of 5.7 percent in Budget 2020 over last year's outlay at Rs 67,484 crore.

The allocation for government's flagship scheme Ayushman Bharat remained flat at Rs 6,400 crore.

The allocation to National Health Mission (NHM) was also flat at Rs 33,400 crore. NHM covers most of the government health initiatives that includes immunization, primary healthcare, various diseases control programme, capacity building, among others.

"With a nominal estimated GDP growth of 10 percent, this also translates into a fall in the public healthcare expenditure as a percentage of GDP. Thus, the public sector spend on healthcare will continue to lag at below 1.5 percent of GDP," said Shubham Jain, Group Head and Senior Vice President, Corporate Ratings, ICRA.

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Jain said the healthcare spend was a healthy 15 percent in the previous budget and the current allocation is much below expectations.

In terms of Gross Domestic Product (GDP) the government spend on healthcare is 1.6 percent in FY20 budget estimate a small rise from 1.5 percent in FY19.

Funding to PPP hospitals

The focus of Sitharaman in the budget was on creation of healthcare infrastructure in aspirational districts with poor social and economic indictors.

The Finance Minister said there are more than 20,000 empaneled hospitals, but many aspirational districts have none of the empaneled hospitals, impacting the accessibility of healthcare to people.

To improve accessibility of health care under Ayushman Bharat Sitharaman proposed a much awaited initiative to set up medical colleges attached to district hospitals under PPP mode. To attract investors she also proposed a viability gap funding (VGF).

The VGF will be funded by a 5 percent health cess on imported medical devices.

"There is a supply side constraint in terms of hospitals, outside the metros. The idea of doing PPP to set up hospitals in the private sector. I think that's very positive. Of course, I think it requires innovative business models, but we are expecting more details," said Dr Rana Mehta, , Partner and Leader – Healthcare, PwC

To reduce out of pocket expenditure, the government has proposed to further strengthen the Jan Aushadhi Scheme by providing 2,000 drugs and 3000 surgicals at very affordable prices.

The government has allowed big hospitals to offer DNB/SNB courses to increase specialist doctors.

Viswanath Pilla
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, 2020 08:04 pm