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Budget 2019: Healthcare gets 15.4% higher allocation despite only passing mention in budget speech

The budgetary allocation for PMJAY remained the same as interim budget's allocation of Rs 6400 crore.

July 05, 2019 / 06:58 PM IST
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Healthcare may have got a passing mention in the Budget 2019 presented by the Finance Minister Nirmala Sitharaman, but allocation to the sector has jumped 15.4 percent to Rs 62,659.12 crore for FY20, compared to
previous year's revised budget.

To be sure, the budget hike wasn't due to Pradhan Mantri Jan Arogya Yojana (PMJAY) or Aysuhman Bharat Scheme. In fact, the budgetary allocation for PMJAY remained the same as the interim budget's allocation of Rs 6,400 crore in February this year.

PMJAY provides an insurance cover up to Rs 5 lakh per family, per year for secondary and tertiary hospitalisation, benefiting over 50 crore poor families. The scheme was launched in October 2018.

The area that saw an increase was the allocation for the National Health Mission (NHM) that spiked 8 percent to Rs 32,995 crore. NHM covers most of the Central sponsored schemes related to healthcare.

Under NHM - the Health and Wellness Centres got 33 percent higher allotment. The budget allocation for Health and Wellness Centres in Budget 2019 for both rural and urban areas stood at Rs 1,600 crore.

Health and wellness centres focused on primary care provide comprehensive health care, including for non-communicable diseases and maternal and child health services. Besides, these centres also provide free essential drugs and diagnostic services.

The allotment is in line with the BJP's manifesto that mentions about its ambitious programme to set up 1.50 lakh Health and Wellness Centres (HWCs) by 2022.

Till date, 17,150 HWCs have become functional.

The National AIDS and STD Control Programme also saw 30 percent jump to Rs 2,500 crore allocation in Budget 2019.

The Pradhan Mantri Swasthya Suraksha Yojana (PMSSY), the agency that's spearheading the creation of All India Institute of Medical Sciences (AIIMS) like teaching hospitals in under-served areas of the country also got a decent allotment.

PMSSY saw the allocation jump to Rs 4,000 crore in the FY20 budget. Family Welfare Schemes also got a 35 percent higher allotment in the budget.

The government also spoke about setting up a National Research Foundation to boost research in all areas, which could benefit pharma and healthcare sectors as well.

Industry reaction

But no mention of incentives for setting up new hospitals in tier-II and tier-III cities dampened the industry expectations.

"There has been no significant announcements pertaining to healthcare in the union budget. While there was hope that the allocation for the health sector in view of the requirement for funding the Ayushman Bharat, this has not been allocated," said Azad Moopen, Founder and Chairman of hospital chain Aster DM Healthcare.

"While the healthcare allocation had been covered in the Interim Budget earlier this year, it is still a little disappointing that there was no new commitment to healthcare in Finance Minister Nirmala Sitharaman’s maiden budget," said Shankar Narang, COO, Paras Healthcare.

Pharma industry which was hoping for a restoration of 200 percent weighted deduction of R&D was disappointed.

“The expectations from the Union Budget 2019 were that of a bold reformist budget, however, it turned out to be an incremental budget at best," said Satish Reddy, Chairman, Dr Reddy’s Laboratories.

"The emphasis on start-ups and on the education sector is a good move. However, there was nothing to fuel growth in the healthcare and pharma sectors, which is disappointing. I was particularly keen on seeing a change in the weighted deduction for R&D which did not happen. A positive policy move of this kind would have spurred R&D and innovation in pharma and other sectors,” Reddy said.

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: Jul 5, 2019 06:58 pm