Healthcare sector awaits July budget for more clarity

However, increased fund allocation is not the full solution. While the centre might release the funds to the states, some states might not have the capacity to use these funds within the timeframe

Not much was expected from the Interim Budget 2024-25, and Finance Minister Nirmala Seetharama has largely stuck to the script. The announcements are being seen as clues to how this government intends to treat the healthcare sector.

Thus the increased outlay towards the National Health Mission by 12.7 per cent in FY25 after remaining largely unchanged in the last two fiscals is definitely good news. The Finance Minister proposes that the overall healthcare budget will increase from Rs 80,518 crore in FY 2023-24 to Rs 90,659 crore in FY2024-25, a hike of more than 11 per cent.

The major announcements for the healthcare sector span the setting up nearly 157 new medical schools by utilising the existing hospital infrastructure under various departments, encouraging vaccination for girls in the age of 9 to 14 for prevention of cervical cancer, and expediting the upgradation of anganwadi centres (for early childhood care in rural areas), etc. The clubbing of maternal and child care schemes is obviously aimed at creating better resource synergies and hopefully better outcomes.

Ayushman Bharat PM-JAY coverage has been extended to approximately 10 lakh ASHA workers and and approximately 25 lakh anganwadi workers, while allocation towards PM-JAY has increased from Rs 6,800 crore to Rs 7,500 crore. The Pradhan Mantri Ayushman Bharat Health Infrastructure Mission (PM ABHIM) also got a higher allocation from Rs 200 crore in FY 2023-23 to Rs 468 crore in FY 2024-25.

The surprise announcement was the introduction of cervical cancer vaccination for women aged 9-14 years, as industry experts point out that the health ministry had indicated that a decision had not yet been taken on this front.

Recommendations are already flowing in for the more detailed budget to be present somewhere around July, by the party that wins the general elections scheduled for April-May. Segments like health tech and startups are expecting more of an impetus, given the potential of new tech like artificial intelligence (AI) in diagnostics and medtech.

The announcement about the roll out off the newly designed U-Win platform for managing immunisation and intensified efforts of Mission Indradhanush is encouraging and is being seen as the government’s continued digital push. Hence it’s being seen as a signal to more investments for health tech and startups in July.

There has been no specific focus on health initiatives for the rural sector. The issue of integrating medical professionals trained overseas too remains unresolved. While the setting up of medical colleges in existing
hospitals aims to address India’s dearth of healthcare professionals, it needs to be accompanied by an
upgrade and revamp of the medical education system itself, to ensure future medicos are in tune with the latest technologies and practices. The Public-Private-Partnership (PPP) model could be deployed to meet these goals but incentives need to be balanced by strict regulations.

Similarly, while telemedicine can be incentivised to address shortage of skilled medical professionals in rural areas, there is also the long term need to train a cadre of medical staff to serve in rural /difficult to reach resource strained areas.

But overall, allocations for healthcare still lag India’s counterparts. An increase from 1.3 percent of the gross domestic product (GDP) in 2015-16, to 1.6 per cent of GDP in 2021 to 2.1 per cent in 2023, is still short of 2.5 per cent of GDP, leave alone the aspirational 5 per cent of GDP. Most healthcare experts are hoping the sector gets infrastructure status, and a substantial boost in the July budget.

However, increased fund allocation is not the full solution. Is the sector able to utilise the funds allocated?

Documents submitted as part of the FY2024-25 interim Budget show that the health and family welfare and health research departments were not able to utilise the allocated budget of Rs 89,155 crore for the last fiscal FY2023-24, with the revised estimate (RE) showing a reduced budget of Rs 80,516 crore. While the centre might release funds to the states, some states might not have the capacity to use these funds within the timeframe. This could reveal a lack of healthcare planning and infrastructure, or a lack of human resources, or lack of healthcare or political leadership at the state level to follow through and ensure the funds are utilised down to the district level. These gaps need to be analysed and plugged, either by PPPs or other means. Overall, the Interim Budget 2024-25 set the stage for July.

Health will remain a focus area, but this government will continue to reward performance (usage of allocation) and results.


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