COVID-19 impact | Separate fund for health sector soon, likely announcement in Budget 2021

Learning from the COVID-19 pandemic, the Centre may create a special fund called the Pradhan Mantri Swasthya Samvardhan Nidhi to strengthen the health infrastructure in the country, said sources on January 12.

While the Ministry of Health and Family Welfare has prepared a draft proposal to create the health sector fund, Finance Minister Nirmala Sitharaman is likely to make an announcement in this regard in the Union Budget 2021-22 on February 1, the sources added.

According to the proposal, it will be a non-lapsable fund in the Public Account, which means the amount kept in the fund will not lapse at the end of a financial year. Collections under the health and education cess will be directed to this proposed fund.

Currently, the government levies 4 percent health and education cess on income tax and corporate tax. Out of which 3 percent is education cess and one percent is health cess. Accordingly, 25 percent of the total collection under the health and education cess will go to this proposed fund.

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In FY20, total proceeds from the health and education cess stood at Rs 56,000 crore. Out of which Rs 14,000 crore was health cess.

The fund will be utilised specially for flagship health sector schemes like Ayushman Bharat, Health and Wellness Centres, Pradhan Mantri Swasthya Suraksha Yojana etc.

According to the proposal, the initial expenditure on any of schemes mentioned above will be met from the gross budgetary support (GSS). Once the GBS is exhausted, proposed fund will be utilised.

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The sources said major benefit of this fund will be availability of additional resources for universal and affordable healthcare in the country.

The government plans to increase the spending on health sector to 4 percent of gross domestic product (GDP) by 2024, from 1.4 percent of GDP at present.

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