Union Budget 2024-25 Missed Major Announcements for Healthcare

But, as found evident in industry expert’s voices, the Union Budget 2024-25 did not address any of the major concerns raised by the ecosystem stakeholders.

Finance Minister Nirmala Sitharaman presented the Union Budget for the seventh time on Tuesday. PM Narendra Modi lauded it as a cornerstone for 'Viksit Bharat,' setting economic trends for his administration's third term.

But, as found evident in industry expert’s voices, the Union Budget 2024-25 did not address any of the major concerns raised by the ecosystem stakeholders.

For example, there was no mention of any specific outlay for healthcare, let alone any scheme to boost the much needed digital health mission. Likewise, there was no mention of a scheme to expand healthcare accessibility and delivery in the difficult terrain of rural India.

Here, let us take a look on how the healthcare industry felt about the Union Budget 2024-25.

Healthcare Missed Major Announcements

The budget faced criticism for its lack of major announcements in the health sector. Additionally, there was no mention of the Center's flagship insurance schemes.

Despite a total allocation of INR 90,958.63 Cr for health, with INR 87,656.90 Cr for the Department of Health and Family Welfare and INR 3,301.73 Cr for Health Research, the increase is just over 12% from last year's revised estimates.

This still falls short of the 2.5% of GDP target promised in the National Health Policy, 2017. Public health experts have expressed disappointment with the mere 1.7% increase in the budget outlay for health.

Industry voices echoed this sentiment. Dr Dharmesh Shah, founder and director of Holistica World, remarked, "While these steps are promising, increasing healthcare expenditure to 2.5% of GDP would provide more substantial support for comprehensive healthcare development. Greater emphasis on R&D, alongside optimized tax incentives and GST rates, could drive further innovation and efficiency in the sector."

Surjeet Thakur, founder & CEO of TrioTree Technologies, added, "Increasing investment in health IT infrastructure by an additional 10% could enhance the integration and efficiency of digital health systems. Expanding funding for telemedicine and remote monitoring technologies could significantly improve access to care, especially in rural areas."

Additionally, Thakur noted that investing in cybersecurity measures to protect patient data and streamlining health IT regulations could further drive innovation and ensure safer, more effective healthcare delivery.

Kerala's Health Minister, Veena George, also expressed her disappointment that the Union Budget 2024 failed to include an AIIMS facility for the state, despite Kerala meeting all necessary criteria.

She highlighted that Kerala has been advocating for an AIIMS facility in Kinalur, Kozhikode, for over a decade, but the matter remains under consideration by the Union Finance Ministry.

Announcements that can Support Healthcare

Exemption of three cancer medicines—Trastuzumab deruxtecan, Osimertinib, and Durvalumab—from customs duties is one of the prominent and relevant announcements in the Union Budget 2024-25.

Further, the allocation of INR 1 Lakh Cr to spur private sector-driven research and innovation, can help boost pharma R&D.

Additionally, changes in basic customs duty on X-ray tubes and flat panel detectors align too with domestic manufacturing capabilities.

The removal of the Angel Tax is a big relief for the startup community including healthtech, while a significant allocation for skilling promises advantages for the pharma sector.

Further, the INR 100 Cr credit guarantee scheme for MSMEs in manufacturing, facilitating term loans for machinery and equipment without collateral, has garnered positive responses from the pharma MSME sector as well.

Industry Reactions

Sharing thoughts, Shobha Mishra Ghosh, director & head, Govt Affairs & Policy, India & South Asia, GE Healthcare, said, ‘’The health expenditure has increased 12.97% to Rs 90958.63 from last year and is expected to expand healthcare infrastructure in Tier 2&3 cities, semi-urban and rural areas supported by State funding and expanding Ayushman Bharat coverage. This combination of interventions is expected to generate demand for healthcare.’’

Calling the Union Budget a game-changer, Gaurav Agarwal, co-chair, Medical Devices Committee, PHDCCI & MD, Innvolution Healthcare on Medical Devices sector, said, "With the government's decision to reduce customs duties on X-ray tubes and flat panel detectors, components not currently manufactured in India. This strategic move will lower costs for healthcare providers, making advanced medical imaging technologies more accessible and affordable.’’

Skill Development & R&D

According to Ghosh, the focus on R&D through operationalization of Anusandhan National Research Fund and INR 1 Lakh Cr pool of funds to drive the commercialization of private sector research will help move domestic manufacturing from volume to value.

‘’The devil lies in the details and timely implementation,’’ she cautioned.

While per Agarwal, the budget's focus on skill development and R&D funding will help cultivate a highly skilled workforce and foster innovation, positioning India as a global leader in the manufacturing of novel technologies.

‘’These initiatives reflect the government's commitment to transforming India into a hub of manufacturing excellence and ensuring the best healthcare outcomes for all,’’ Agarwal noted.

Big Boost to MSMEs

Facilitating term loans for machinery and equipment without collateral has brought in several praises.

Sharing thoughts, Mandeep Singh Basu, director, Jagat Pharma, said, “The emphasis on facilitating term loans to MSMEs through the new credit guarantee scheme is appreciated. This initiative is immensely beneficial as it offers essential collateral-free loans, greatly improving credit access for MSMEs. This budget marks a significant advancement towards fostering growth and resilience within the MSME sector.’’

He also highlighted that new and small businesses often lack sufficient collateral to avail of loans, and collateral-free loans remove this barrier, allowing more businesses to access the funds they need to grow and operate.

‘’By offering credit-free loans, the government is encouraging entrepreneurship and the establishment of new businesses. We are confident that these initiatives will positively impact the sustainability and development of businesses nationwide,” the Jagat Pharma director expressed.

Abolition of Angel Tax

The abolition of the Angel tax has been widely applauded by the startup community, aligning with the government's objective to bolster Indian startups.

On the development, Abhishek Sinha, cofounder, HealSpan, said, “We extend our gratitude to the Finance Minister for further simplifying income tax and abolishing the Angel Tax. The manufacturing sector, particularly through SMB players, has received a significant boost from this budget.’’

“As a health tech company, TrioTree Technologies welcomes the simplification of capital gains taxation and the abolition of the Angel Tax, which will foster a more conducive environment for startups and innovation,’’ Thakur stated.

Medical Education

Amid the NEET chaos, FM Sitharaman also announced the establishment of medical colleges which are aimed at boosting the healthcare sector.

Expressing thoughts on the same, Shah said, ‘’The establishment of new medical colleges is set to increase the number of trained medical professionals, addressing critical shortages and improving healthcare delivery in underserved areas. Furthermore, the relief measures for cancer patients, including the exemption of certain medicines from customs duties, are expected to alleviate financial burdens and improve patient outcomes.’’