Budget FY25: Some key healthcare demands remain unaddressed

Despite a double-digit increase in healthcare allocation, India continues to fall short of the target set by its National Health Policy 2017 to allocate at least 2.5% of GDP to healthcare.

The Department of Health and Family Welfare’s FY 2024-25 budget is Rs 87,656.90 crores, reflecting a 12.93% rise from the revised allocation of Rs 77,624.79 crores for the previous year. This increase is intended to enhance funding for health services and infrastructure.

The initial allocation for FY 2023-24 was Rs 104,683.00 crores, later revised to Rs 91,633.35 crores, with Rs 88,923.99 crores allocated for revenue and Rs 2,709.36 crores for capital expenditures. For FY 2024-25, the budget has been set at Rs109,551.36 crores, comprising Rs 105,939.07 crores for revenue and Rs 3,612.29 crores for capital expenditures.

This represents a 4.64% increase over the initial 2023-24 budget and a 19.61% increase compared to the revised budget for 2023-24. After accounting for recoveries, the budget shows a 1.72% increase from the initial 2023-24 budget and a 12.93% increase from the revised budget.

“The budget does not focus on healthcare as another pillar of Viksit Bharat, nor does it allocate more than 2.5% of GDP or introduce reforms to support sector growth and domestic manufacturing of medical technology. The ₹90,958 crores allocation is a 12.93% increase over the previous year but may not sufficiently address the demand-supply gap in India’s healthcare,” Vishal Bali, Executive Chairman of Asia Healthcare Holdings (AHH), said.

The state of healthcare in India
The National Health Policy of India 2017 aims to increase public health expenditure to at least 2.5% of GDP by 2025, reflecting the policy’s focus on improving healthcare financing and ensuring adequate resources.

Dr Ashutosh Raghuvanshi, MD & CEO of Fortis Healthcare Limited, noted several unmet demands in the current budget, including increasing the GDP spend on healthcare to 2.5%, prioritising healthcare as a national issue, and promoting medical value travel in India. “Some longstanding healthcare sector demands remain unaddressed. We urge these issues be considered in future budgets to build a healthier, stronger India,” he said.

According to the Indian Brand Equity Foundation (IBEF), public health spending for FY 2024 stands at approximately 2.1-2.2% of GDP, below the global average. In comparison, the United States allocated 17.9% of GDP to public health in 2022, China 6.6% in 2021, and Brazil 9.2% in 2021.

According to the Ministry of Health and Family Welfare, India’s public health infrastructure and manpower have seen gradual improvements over recent years, though significant shortages remain. As of 2022, there were 157,939 Sub-Centres (SCs), up from 152,326 in 2014. Primary Health Centres (PHCs) numbered 24,935, slightly down from 25,308 in 2014, while Community Health Centres (CHCs) increased to 5,502 from 5,335 in 2014.

Despite these increases, there are shortages. The World Health Organization (WHO) recommends a doctor-to-population ratio of 1:1,000. However, India had a ratio of about 1:1,511 as of 2022, indicating a shortfall in medical professionals. The number of doctors at PHCs rose to 30,644 in 2022 from 27,421 in 2014, yet many PHCs still operate without a full complement of medical staff. Total specialists at CHCs increased to 4,544 from 4,152 in 2014, but the requirement is higher, leading to gaps in specialized care.

Auxiliary Nurse Midwives (ANMs) at SCs and PHCs numbered 207,604 in 2022, down from 213,467 in 2014, showing a decline in crucial frontline healthcare workers. Additionally, there is a shortfall in nursing staff, with 79,924 at PHCs and CHCs in 2022 compared to the requirement for more to meet healthcare demands. Pharmacists and lab technicians at these centres increased to 27,130 and 22,783 respectively, from 22,753 and 16,710 in 2014, but these numbers fall short of the needs.

Under the Ayushman Bharat programme, 150,000 Health and Wellness Centres (HWCs) were operational as of December 2022, aimed at delivering comprehensive primary healthcare services closer to communities. Despite these initiatives, the overall healthcare infrastructure still faces challenges in addressing the diverse needs of India’s population.

Chaitanya Sarawate, Managing Director of Wipro GE Healthcare, mentioned that the increased health expenditure to ₹90,958.63 crores is expected to improve healthcare infrastructure in Tier 2 and 3 cities, towns, and rural areas, providing better access to healthcare services.

Pharmaceutical sector: Shot in the arm
The budget’s increase in funding for Production Linked Incentives by 40.9% to ₹85 crores is intended to support the MedTech sector. Sarawate emphasised the need for simplification and expansion of the scheme to facilitate industry adoption.

The Union Finance Minister has announced an estimated Production-Linked Incentive (PLI) allocation of ₹2,143 crores for the pharmaceutical industry for FY 2024-25, aimed at enhancing domestic manufacturing capabilities and fostering innovation.

Sarawate also highlighted the potential impact on research and development with the operationalisation of the Anusandhan National Research Fund and a ₹1 lakh crore financing pool, which may aid India’s transition to value manufacturing.

Additionally, customs duty rates on x-ray tubes and flat panel detectors have been revised. This adjustment is expected to positively impact the x-ray machine industry by improving component availability and reducing costs. “This change is anticipated to support the domestic medical device sector, enhance component availability at reduced costs, and make advanced medical imaging more accessible and affordable,” stated the Union Health Ministry. The revised duty rates respond to the industry’s request, promoting local manufacturing while addressing capacity constraints.

The budget for the National Health Mission (NHM) has been increased by approximately ₹4,000 crores, from ₹31,550 crores to ₹36,000 crores. NHM focuses on primary and secondary healthcare services nationwide, aiming to reduce out-of-pocket expenses through investment in healthcare facilities. “The government aims to invest in primary and secondary public healthcare facilities to implement preventive and curative health measures, thereby reducing out-of-pocket expenses for the public,” the government said.

The budget also includes plans for developing Digital Public Infrastructure (DPI) applications to drive productivity, business opportunities, and innovation across sectors including health. Another proposal includes the establishment of 100 weekly “haats” or street food hubs in select cities, aimed at supporting local economies and enhancing community engagement.

In a related move, the government said that the Department of Pharmaceuticals’ Phased Manufacturing Programme (PMP), introduced in January 2021 to promote domestic production of medical x-ray machines, has been revisited. Due to ongoing industry development, the Ministry of Finance has revised duty rates to support local manufacturing and ensure adequate supply, the government said. Business Today