Indian Union Budget 2023-24: Key announcements for healthcare sector

Lalit Mistry, Partner and Co-Head, Healthcare Sector, KPMG in India shares his views on union budget 2023-24

The Union Budget 2023-24 allocated Rs 89,155 cr to the Ministry of Health and Family Welfare, nearly 3.4 per cent increase in comparison to Rs 86,200 cr in FY 2022-23. National Health Mission (NHM) was allocated Rs 29,085 cr, which is 21 per cent less than Rs 37,000 cr allocated in 2022-23.

Although there was a need for increased allocation to central sector expenditure to continue building sustainable healthcare infrastructure to handle the increasing healthcare needs, most of the central schemes witnessed a decrease (Rs 8,820 cr in 2023-24, a decrease of 41.8 per cent from Rs 15,163 cr in 2022-23).

  • This was primarily due to the significant decrease of 66.4 per cent in allocation to Pradhan Mantri Swasthya Suraksha Yojana (PMSSY) from Rs 10,000 cr in the previous budget to Rs 3,365 cr this year. However, the amount of Rs 6,835 cr has been reallocated for the establishment expenditure of 22 new AIIMS, under Autonomous Bodies as a part of other Central Sector Expenditures.
  • Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) which was allocated Rs 7,200 cr this year (12 per cent increase from Rs 6,412 cr in 2022-23) highlighting the government’s focus on expanding the AB-PMJAY health coverage to over 400 million more people who are currently not covered under any government or private health insurance scheme. This might gain the interest of hospitals/investors and provide a boost to the healthcare sector.
  • Human Resources for Health and Medical Education was allocated Rs 6,500 cr, a decrease of 13 per cent from previous year’s allocation of Rs 7,500 cr. The amount allocated will be provided to States/UTs for establishing new medical colleges/upgrading district hospitals, upgrading/strengthening of nursing services, establishing pharmacy schools or paramedical institutions, increasing UG & PG seats in existing medical colleges, etc. Development of Nursing Services was allocated Rs 33 cr, an increase of 67 per cent in comparison to the last year budget (Rs 20 cr). This is aimed to strengthen the Nursing sector in the country, in line with establishment of 157 new nursing colleges. Private participation can be leveraged in both these initiatives for setting up and operationalising healthcare institutes.
  • As a part of budget allocated to the Department of Health Research, Rs 2,360 cr out of Rs 2,980 cr was allocated to Indian Council of Medical Research (ICMR), an increase of 7.4 per cent from last year. Furthermore, the initiative of making select ICMR labs to be made available for research is expected to encourage collaborative research and innovation.
  • Allocation for insurance of COVID-19 healthcare workers under Pradhan Mantri Garib Kalyan Package has dropped significantly from Rs 226 cr in 2022-23 to only Rs 0.01 cr in 2023-24. Also, there was a decrease of 23 per cent (Rs 55 cr compared to 72 cr under budget 2022-23) in the allocation for the combined scheme of establishment & strengthening of NCDC Branches. Similarly, no amount was allocated for blood transfusion services under this year as compared to Rs 404 cr in previous year.

The launch of a unified Skill India Digital platform is expected to aggregate public and private sector and academic institutes to provide healthcare skilling courses, contents and certifications along with MoHFW, state governments, National Skill Development Corporation (NSDC) and the private sector. Although the initiation of dedicated multidisciplinary courses in existing institutions for bolstering skilled manpower for futuristic medical technologies is a step in the right direction, training more workers is no longer sufficient, nor is it sustainable. Instead, India needs to develop a roadmap for upskilling the existing workforce and expanding the healthcare workforce. Similarly, the government has shown an interest towards infrastructure development by launching the Aspirational Blocks Programme covering 500 blocks, however clear guidance on incentivisation of the private sector in infrastructure development for medical education and healthcare service delivery has not been provided.

The healthcare sector is currently witnessing an increase in access to patients and citizens via the launch of digital health (Rs 341 cr was allocated to ABDM, 70 per cent increase compared to Rs 200 cr) and mental health programs (National Tele Mental Health Programme was allocated Rs 134 cr) providing opportunities to human resources, hospitals, and investors in the sector.  The need of the hour is a clear implementation roadmap of the new and flagship schemes with a focus on monitoring the impact and outcomes in India. Additional funding and a national agenda around these crucial development schemes is needed to enhance the quality of care in the public and private sector of the country.

KPMG IndiaMinistry of Health & Family WelfareUnion Budget 2023-24
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