Snippets related to health care sector from budget for 2009-2010
Pranab Mukherjee’s Budget has brought some cheer to the over 20 lakh patients suffering from breast cancer, Hepatitis B and rheumatic arthritis. Nine life-saving drugs used for the treatment of these diseases, as well as that of the influenza vaccine, have been exempted from customs duty, making them 10%-15% cheaper. The FM also reduced customs duty on two life-saving devices used in treatment of heart diseases from 7.5% to 5%.
The focus, however, is clearly on the hinterland. The National Rural Health Mission — UPA’s flagship programme to take healthcare to the country’s far-flung areas — saw an increase in allocation of Rs 2,057 crore over and above the Rs 12,070 crore provided in the interim Budget. To bring all BPL families under the medical insurance cover, Mukherjee has allocated Rs 350 crore—a 40% increase over the previous allocation—to Rashtriya Swasthya Bima Yojana. The project has distributed biometric smart cards to 46 lakh BPL families.
The spending target for education has been increased by 19% over last year while expenditure on health is being projected to go up by 23%.
Spending on the National Rural Health Mission (NRHM) — targeting 700 million Indians — is projected to go up by over Rs 2000 crore. While the health sector needs funds, unutilised amount of Rs 11000 crore with the states reveals that the modalities need to be ironed out.
Legislation for unorganized sector, accounting for 92% of employment, might have taken a long time during UPA's first term but the finance minister Pranab Mukherjee has lost no time in initiating social security schemes for unorganised workers in various streams. An allocation of Rs 308 crore has been made in the Budget for this purpose.
Social security scheme will be launched for weavers, fishermen and women, toddy tappers, leather and handicraft workers, plantation labour, construction labour, mine workers, bidi workers and rickshaw pullers. Initially, the scheme will mainly provide health insurance to unorganised sector workers.
It’s a pep pill for the pharma industry, with the Budget retaining excise duty at 4% and reducing customs duty on certain life-saving drugs and heart devices. Prices of 9 specified drugs, which are mainly biologics used for the treatment of cancer, HIV, hepatitis-B and arthritis, and two life-saving heart devices, will come down as a result of reduction in customs duty from 10% to 5% on medicines and bulk drugs, and from 7.5 to 5% on devices. “Reduction in customs and central excise duties for selected drugs will benefit patients,” said Indian Pharmaceutical Alliance secretary general DG Shah.
Other positives, according to Piramal Healthcare director Swati Piramal, are “excise duty remaining at 4% and proposed introduction of goods and services tax. Implementation of GST will reduce transaction costs which add up to 60% for the pharma industry.”
The market for life-saving drugs specified in the Budget, including for rheumatoid arthritis, hepatitis-B, cancer and arthritis, is marginal, and thus does not impact the industry. Multinationals and domestic companies, which are manufacturing these medicines or bulk drugs will be benefited by the proposal.
Says Satish Reddy, MD and COO Dr Reddy’s, “Though there were no big moves for pharma, increased government spending on healthcare will have a positive impact. Extension for scope of provisions relating to weighted deduction of 150% on expenditure incurred on in-house R&D to all manufacturing businesses is a positive move.” Customs duty has been reduced from 7.5% to 5%, and excise duty and CVD also exempted on two heart devices—artificial heart and patent ductus arteriosus and atrial septal defect occlusion devices. Hitesh Sharma, partner & national leader (health sciences) Ernst & Young, says, “This proposal is likely to rationalize the cost of treatment of heart ailments which are generally expensive for a large size population suffering from heart ailments in India.”
(Source: The Times of India, 7 July 2009)