Budget 2017-18: Hits & misses for healthcare sector

Dr. Rajeev Boudhankar, CEO, Bhatia Hospital

The Union Budget 2017-18 presented by Finance Minister Arun Jaitley on February 1 brought cheers to certain sections of the Indian healthcare industry, even as it left many to desire for more. Dr Rajeev Boudhankar, CEO, Bhatia Hospital, Mumbai, analysis top hits and misses for healthcare industry.


  • Rs 500 crore allocated to set up Mahila Shakti Kendras and allocation raised for women & child welfare from Rs 1.56 lakh crore to Rs 1.84 lakh crore were welcome steps that will help control malnutrition in the paediatric age group, help reduce maternal mortality rate and infant mortality rate.
  • 1.5 lakh health sub-centres will be transformed to health wellness centres.
  • Steps to ensure availability of specialist doctors for strengthening secondary and tertiary healthcare by creating additional 5,000 seats for PG courses per year, rolling out DNB courses in big district hospitals, strengthening PG courses in select ESI and Municipal Hospitals & encouraging reputed private sector hospitals to start DNB courses in association with state governments. This is a right step in the right direction for stimulating tertiary healthcare and increasing the pool of specialist doctors.
  • To improve health, the government proposes to eliminate Kala-Azar and Filariasis by 2017; Leprosy by 2018; Measles by 2020; and Tuberculosis by 2025.
  • Two new AIIMS Hospitals to be set up in Jharkhand and Gujarat.
  • Amendment of drugs and cosmetic rules for use of generic drugs. Medical devices will also be included under price control. This will help in reducing overall healthcare costs to the common man.
  • Digi-Gaon and rural electrification programme will boost tele-medicine and the rural population will benefit in terms of decreased travel costs to bigger centres for health needs.
  • Smart health cards through Aadhar for senior citizens will be a boon in the long run, if successfully implemented, for the aging population of the country.


  • The Finance Minister should have made greater provision for the National Rural Health Mission and National Urban Health Mission — at least 50 thousand crores each.
  • Local post offices and Aadhar card centres could hav been leveraged to promote health insurance penetration throughout the country
  • Direct tax benefits for capital expenditure, a 10-year tax holiday for hospital projects
  • Exemption from GST Budget Recommendations
  • The New health protection scheme of last budget should have been extended to provide health cover up to Rs 3 lakhs per family for all families below the poverty line with an additional top-up package up to Rs 1 lakh for senior citizens.
  • Tax exemption on preventive health check-ups should have been raised from the current Rs 5,000 to a maximum of Rs 20,000 under section 80-D of the Act.
  • Increasing the Tax Exemption on Medical Expenses – The current tax exemption limit of Rs 15,000 per annum towards reimbursement of medical expenditure by the employer is inadequate in comparison with the medical expenses incurred by the taxpayer and needed to be increased to at least Rs 50,000 per annum.
  • Exemption from Input Service Tax — Clinical Establishments are indirectly being subject to levy of service tax for use of various services which in fact increase the cost of treatment of medical services. Scope of healthcare support services should have been expanded to include pathological services, dermatology, infrastructure and logistics support, in order to reduce the input tax.
  • Tax Incentives should have extended the benefit of deduction under Section 35AD of the Act to a 50 bedded specialty centre which is focused on treatment of non-communicable diseases (NCDs).
  • The healthcare business by its very nature needs to make continuous investments to upgrade existing capabilities. It was imperative to provide for a tax incentive in terms of substantial expansion to upgrade existing capabilities in an existing hospital. The Minister should have recommended that the deduction under section 35AD of the Act may be extended to provide benefits to hospital incurring substantial expansion.
  • Tax Incentives for Specified Activities Tax incentives should have been provided for the following activities:
    • Digitisation – To boost the Digital India initiative of the government, financial incentives/grants should have been provided to institutions that are willing to move towards maintenance of Electronic Health Records (EHR) and Health IT Systems. 250% deduction on investment made for the implementation of EHR should have been extended.
    • Accreditation – To incentivise hospitals and diagnostic laboratories to undergo accreditation, there should have been 100% deduction on approved expenditure incurred for securing accreditation from National Accreditation Board for Hospitals and Healthcare Providers (NABH) and National Accreditation Board for Testing and Calibration of Laboratories (NABL) respectively.
    • Remote care – 250% deduction for approved expenditure incurred on operating technology enabled healthcare services like telemedicine, remote radiology etc. should have been allowed for improving accessibility, affordability & quality healthcare in remote areas.
  • Big time reforms in the medical education field are needed to make up for the short fall of doctors, nurses, technicians and paramedical staff.
  • There is no clarity about how new health wellness centres will be different from the present health sub-centres or services provided by them.
  • Elimination of Kala-Azar, Filariasis, Leprosy, Measles and Tuberculosis cannot be done on a piece-meal basis and will require public health education to supplement the preventive measures in the arena of public health. All previous governments have tried doing this but have failed due to this piece-meal approach.
  • There is a short fall of medical teachers due to disparity of earnings in the public sector with respect to the private sector. Hence, short sighted measures like opening of new AIIMS will not be enough but overall reforms in medical education quality and pay parity is the right step. Government spending of at least 5% of overall GDP in the next five years should be aimed by the government. If health sector gets infrastructure status the fund flow from external commercial borrowing route will flow in this sector to boost infrastructure required for more hospitals in the private sector who are willing to start even under graduate medical colleges and post graduate DNB courses. However, this long standing demand of the healthcare sector was overlooked by the Finance Minister once again.
  • Funds allocation for research in the Pharma sector would have helped develop new molecules especially for newer anti-microbial as India has the highest rate of drug resistance multi-nationals are reluctant are not investing in this field. ICMR research is also suffering due to dearth of funds which should have been done by the Finance Minister.

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