Healthcare Leaders Decode Union Budget 2020

Union Budget 2020

In the light of Indians becoming vulnerable to non-communicable, lifestyle related issues, and new kind of infectious diseases, the government has laid out its policy crystal and clear in the Union Budget 2020-21. It has acknowledged the importance of accessible and affordable model of healthcare delivery system and focused on bringing in several key structural reforms paving way towards its goal for universal Health coverage. Mukul Kumar Mishra of Elets News Network (ENN) encapsulates analytic viewpoints of healthcare leaders about measures undertaken in the Budget and wider ramifications of the same.



Highlighting the Government’s vision of ‘Health for All’, the Union Finance Minister Nirmala Sitharaman recently announced a series of measures as part of the Union Budget 2020 presented in the Parliament. The first budget of the new decade of 21st century was presented amidst huge expectations of healthcare fraternity pertaining to a substantial increase in health allocation, revision in GST rates on medical equipments, impetus to primary care, and encouraging private players to set shops in tier-2 and three cities by offering major incentives and tax breaks.

Though the Government has tried to address some of the concerns with announcements like viability gap funding, 5 percent cess on the import of medical devices, setting up PPP mode hospitals in 112 aspirational districts, and expansion of Jan Aushadhi programme, those are not considered enough to fix huge fault lines at various levels of the Indian healthcare delivery system.



A total of Rs 69,000 crore has been earmarked for health including Rs 6400 crores for Prime Minister Jan Arogya Yojana (PMJAY), an increase of 4.1 percent over the previous year’s allocation of Rs 62,659.12 crore. As per the Indian Medical Association (IMA) allocation seems too meagre to have any impact. As per the association, Rs 1,60, 000 cr is needed to provide effective care under Ayushman Bharat only.

Moreover, the National Health Policy targets to increasing the health budget to 2.5% of GDP by 2025. The current health budget (Union and state together) languishes at about 1% of GDP. Increasing it by 2.5x in the next five years would require at least a 25% increase in allocations on a year-on-year basis.


The Government has proposed Viability Gap Funding window for setting up hospitals in underserved areas. Viability Gap Finance means a grant to support projects that are economically justified but not financially viable. In the phase-1, hospitals would be set up in 112 identified aspirational districts to increase accessibility of healthcare services through PM- JAY (Pradhan Mantri Jan Arogya Yojana ) to the people who need it most. This would also provide large scale employment opportunities to youth.

“We need more in tier-2 and tier-3 cities for poorer people under Ayushman Bharat scheme. It is proposed to set up viability gap funding window for setting up hospitals in the PPP mode,” Sitharaman said in Budget speech.


With an objective to encourage domestic medical device companies and Make in India concept, a nominal health cess of 5% on imports of specified medical equipment has been proposed. The move is aimed to generate resource for delivery of health services in different parts of the country especially in remote areas.

The proceeds are expected to be used for building health infrastructure in aspirational districts. The government will begin with those districts that do not have an Ayushman Bharat hospital.

The Medical Technology Association of India (MTaI), that represents mainly research- based medical technology companies has termed the move as retrograde, going against the ethos of Pradhan Mantri Jan Arogya Yojana (PMJAY) wherein government wants to provide affordable healthcare to all.

The cess imposed by the government on medical devices will lead to an increase in cost of imported products and reduce affordability of healthcare, a statement from (MTaI) said.

The move will prove to be detrimental as patients will have to bear the increased cost of the imported medical devices.


In order to improve the nutritional status of children, pregnant women and lactating mothers, the Government had launched “Poshan Abhiyan” in 2017. Continuing with the objective to ensure good health to mother and child, an amount of Rs 35, 600 crore has been allocated for nutrition-related programmes in the budget. In an endeavour to decrease the maternal mortality rate, a task force will also be set up which will submit its report in six months.


Shortage of skilled workforce including doctor is glaring issue affecting delivery of healthcare services to people at large. To do away with the same, the budget has proposed to attach a medical college to a district hospital in PPP mode. In addition, it envisages special bridge courses to train nurses, and other paramedic staff as they play a pivotal role in whole spectrum of care delivery system. A total of Rs 3,000 crores has been allocated for skill development programmes.

More than six lakh anganwadi workers have been equipped with smart phones to upload the nutritional status of more than 10 crore households, the Finance Minister announced in the Parliament. The Government will also encourage large hospitals with sufficient capacity to offer resident doctors DNB/ FNB courses under the National Board of Examinations, said the Minister.


As government embarks to achieve Universal Health Coverage, quality and affordable medicine holds huge significance. In this light, Jan Aushadhi Kendra Scheme will be expanded across country, offering 2,000 medicines and 300 surgicals by 2024.


The Government has reiterated importance of cutting-edge technology and R & D, to develop robust infrastructure in different fields including healthcare. While delivering speech, Sitharaman highlighted roles of data, AI and ML in facilitating things.

She proposed two new national level Science Schemes, to create a comprehensive genetic database. Through genome sequencing methodology, researchers can easily detect the disease related to a genetic disorder. The genome project is also said to improve the techniques of genetic screening for diseases prior to birth.


The Budget has also proposed single-window Investment Clearance Cell with end-to- end facilitation that will provide a boost to the entrepreneurial spirit. The Government will also provide early life funding, including a seed fund to support ideation and development of early stage startups.


The Government aims to wage war against tuberculosis (TB), eradicating it by 2025 – ‘TB Harega, Desh Jeetega’. As per World Health Organisation’s global report in 2019, India is leading the globe in TB cases, and 27 per cent of world’s new infections are found in the country. A report says 10 million people had TB in 2018, and it kills 1.5 million every year.


Even if Government has tried to address pertinent issues of healthcare, there are many areas which got least attention in terms of allocation.


The Budget has decreased allocations for nursing care. For an example for the ‘Development of Nursing Services’, a total of Rs 16 crore has been allocated in comparison to Rs 50 crore in the last budget.


Health and wellness centre which provides primary care is one of the components of Ayushman Bharat along with Pradhan Mantri Jan Arogya Yojana (PMJAY) ensuring secondary and tertiary care to vulnerable people. The allocation for rural HWCs hasn’t been increased this time which will affect goal to establish 1.5 lakh HWCs in coming years.


Rural HWCs are included under the budget head called ‘National Rural Health Mission’, which includes funding for strengthening other components of public health systems in rural areas. This budget head hasn’t had a hike since last year either.


The budget has reduced allocations to autonomous institutes such as the All India Institute of Medical Sciences (AIIMS), New Delhi, the Postgraduate Institute of Medical Education and Research, Chandigarh, and the National Institute of Mental Health and Neurological Sciences (NIMHANS), Bengaluru, providing cutting edge research and teaching facilities.


There are other grievances of medical equipment companies like regulatory framework for all medical devices, curbing MRP and trade margins over imports, restricting imports of pre-owned medical equipments in absence of regulations and preferential pricing for quality products in public healthcare, which have not been addressed.


Ayushman Bharat it seems is key focus area of the Government which will be strategically leveraged in coming years to provide better care to masses. Within a span of couple of years, the Government aims to open hospitals in tier-two, three cities and to fill loopholes on several fronts, in order to bolster care delivery system. Terming the scheme a gamechanger, many stakeholders have aired grievances regarding compensation packages which need to be addressed in pragmatic manner. Overall, the budget has tried to put up a holistic vision for the Indian healthcare system through the Union Budget, though time will tell how these measures will bring the effective change.

Budget 2020 Analysis by Healthcare Leaders

DR SANGITA REDDY – Joint MD, Apollo Hospitals Group

Given the constraints that the Finance Minister was facing, this has been a comprehensive statement. The government has done a commendable job and the various measures announced will strengthen India, individuals and industry. By invoking the deviation clause in FRBM act and relaxing the fiscal deficit to 3.8 percent in the current year and targeting 3.5 percent in the next year, the government has underscored its resolve to support the economy at a time when it needs a fiscal boost.

DR ALOK ROY – Chairman of Medica Group of Hospitals

The government has shown its commitment towards healthy India by providing Rs 69,000 crore to the healthcare sector. It has rightfully focused on bringing in several key structural reforms for the nation moving towards that goal. It is heartening to see the Government’s display of commitment and concern towards rural healthcare by announcing more empanelled hospitals under the flagship Ayushman Bharat Scheme in Tier 2 and 3 cities. The budget has rightly outlined by specifically focusing to those areas where there are no hospitals. The proposal to set up Viability Gap Funding window to build hospitals in the public-private-partnership (PPP) model will widen the scope of the government’s flagship scheme, AB-PMJAY and will provide large scale employment opportunities to youth.

RAJIV NATH – Forum Coordinator, Association of Indian Medical Device Industry (AiMeD)

We were expecting the government to move forward on promised reforms and anticipated conducive measures to boost domestic manufacturing of the medical devices. It is frustrating that against our expectations, the government has not included any measures to help end the 80-90% import dependence forced upon us and an ever increasing import bill of over Rs. 38,837 Crore & promoting growth Indian Medical Device industry.

AIMED after going through the fine prints of the budget finds out that only a meagre increase of 0.25% is given whereas the Medical Devices Industry thought 5% cess on Basic so it’s 5+ 5 = 10%.

DR AZAD MOOPEN – Founder Chairman & Managing Director, Aster DM Healthcare

The Union Budget, prepared in difficult economic scenario has managed to create opportunities for growth within limited resources. It is good to see that Finance Minister has provided some benefits in the union budget for the healthcare sector.

However, it is unfortunate that the allocation of Rs 69,000 cr for the sector is only just 1% of GDP which will be highly inadequate for any major leap forward in the sector. The budget is almost silent regarding NRIs and many of the demands and suggestions to benefit them have not been considered.

The Budget has created huge anxiety and significant confusion among the NRI community. While there is no benefits in the budget for the NRIs who send billions of dollars to their motherland to shore up its foreign currency reserves every year, it appears that they Central Government is trying to put them into difficulty through some of the budget proposals.

MANISH SACHETI – CFO, Ziqitza Healthcare Ltd

This year’s Union Budget has been a positive, holistic and visionary one for the healthcare segment. The allotment of Rs 3000 crore funds under skill development is a positive move by the government since the EMS (Emergency Medical Services) industry requires a high number of skilled individuals in paramedics as they play a vital role in saving lives. There is also a huge potential for job creation in the EMS segment. The announcement by the Government to provide viability gap funding for setting up PPP mode hospitals in areas like tier 2 and tier 3 cities under the Ayushman Bharat Scheme is another positive move.

GAUTAM KHANNA – CEO, P.D. Hinduja Hospital & MRC

We are delighted with the budget allotment of Rs 3,000 cr for the skill development sector. This will help further hone skill of Indian healthcare practitioners to match the international standards.

Also, district hospitals being attached to medical education institutes is a good thought out step by the Government that will help to increase the number of doctors in our country which is the need of the hour. However, we will need more clarity on how the big hospitals will increase its students for the DNB Courses as this will require more professors which is a limitation today.

Overall the allotments in total of Rs 69,000 crore inclusive of Rs 6,400 crore of PM Jan Aroyga Yojana will help entrepreneurs and healthcare providers set up care centers which will help to multiply the serves to the population.

CHANDER SHEKHAR SIBAL – Senior Vice President, Fujifilm India

The emphasis and outlay for healthcare and education was a much-needed boost to create a healthier and more skilled India. The government’s intent to make a healthy India by expanding its horizon and supporting the “TB Harega, Desh Jeetega” to eradicate tuberculosis by 2025 is a commendable initiative that will yield positive and long-term impact.

Rs 69000 crore stimulus to the healthcare sector will provide the required impetus to the sector. Further, the government’s proposal to boost the domestic electronics manufacturing will also impact the healthcare sector encouraging innovation and reducing cost of healthcare. We believe that the government has put forward a progressive budget with a strong vision to take India’s social, economic and overall well-being to greater heights.


Proposed allocation of Rs 69,000 cr in the budget towards better healthcare for tier 2 and 3 towns, is a welcome move as it will create employment opportunities and create access to quality healthcare services in those underserved areas. Extending PMJAY to bring more underprivileged within its ambit will ensure better treatment options for the underprivileged. However the budget failed to address the long-pending request to remove/minimize GST slab for health insurance premiums paid. Health insurance penetration being low in the country, change in the GST slab could have driven growth in the number of insured.

SHALABH PALIWAL – Chief Financial Officer, Jaslok Hospital and Research Centre

Budget 2020 has certainly focused more on the healthcare than previous budget. Government in last two fiscal years have increased budget for healthcare sector from Rs 54000cr to Rs 69000cr mainly aiming to provide more support to schemes like Ayushman Bharat, PMJAY, Mission Indradhanush and more. Government will be concentrating on empanelling hospitals under Ayushman Bharat more in tier 2 cities for the benefit of the poor in these areas. Also in rural areas, where there are no hospitals, government aims to operate on PPP mode hospitals. As a measure to boost local manufacturing of medical equipment government has proposed health cess on import which is going to help in boosting local industries and encourage competition.

ZOYA BRAR – Founder and CEO, CORE Diagnostics

It is encouraging to see over 10% increase in the allocation of funds to the Healthcare sector for the budget 2020-21. While there has been no significant announcement pertaining to diagnostics industry, it is good to see the government’s growing focus on PPP mode ensuring accessibility and availability of quality healthcare services in remote locations.

We are intrigued about how the government will use the fund of Rs 6400 crores allocated exclusively to Ayushman Bharat to the benefit of the people residing in tier II and III cities. The expansion of government’s existing programme – Mission Indradhanush – to cover 12 new diseases and 5 new vaccines would be extremely beneficial in order to drive immunization across the country. The investment of Rs 8,000 crore for National Mission of Quantum Technology and Application is another noteworthy announcement for the healthcare industry.


The allocation of Rs 3000 crore for skill development of teachers, nurses, paramedical staff and care givers is an excellent step, well-trained resource has always been one of the major concern for the healthcare industry. But what’s still missing is a healthcare scheme that provides cover for out- patient department (OPD) and diagnostics expenses. Ayushman Bharat, being the world’s largest government-funded insurance scheme, could have brought in diagnostics under its ambit, as the Indian healthcare spends huge amount under out-of-pocket expenditure.

NITIZ MURDIA – Marketing Director, Indira IVF

Increased budget allocation will definitely help the healthcare sector to grow. Better healthcare facilities were needed for tier 2 & tier 3 cities. The step to provide medicines at affordable rates is the need for the hour especially for the economic weaker section of the society. But the insurance coverage remained poor leaving higher expenditure struggle for people. The accessibility of the healthcare services for people will increase with focus on the infrastructure. More was expected from the government for the healthcare industry as it is directly related to the citizens’ existence.

GAURAV GUPTA – Co-founder, Navia Life Care

From the healthcare sector perspective, accessibility issues were addressed and setting up of more hospitals in tier- II and III cities under the PPP model for expansion of the Government’s Ayushman Bharat scheme is a step in the right direction. It would definitely assist health-tech startups like Navia to expand its reach to Tier-II and Tier-III cities.

KR RAGHUNATH – Senior Chairman, Jindal Naturecure Institute

We are not going to be able to achieve universal health coverage with traditional approaches alone. We also need to harness the preventive health benefits of alternative medicine systems to tackle the rising NCD surge. Even the WHO has talked about the need to promote standardized and regulated practice of alternative medicine in conjunction with conventional medicine to tackle chronic conditions. It is high time the government seeks the expertise of the stakeholders in the industry and come to a decision on the regulatory policies and standardization protocols that will promote judicious use of alternative medicine. It will also promote research, randomized control trials and help lay the foundation for integrating them into the traditional healthcare setting so that patients stand to reap their benefits.

NIVEDITA DAS GUPTA – India Country Head, Miracle Foundation India

The Finance Minister’s announcement in the Budget 2020, with its three-pronged focus on aspirational India, economic development for all, and the emphasis on building a more compassionate society is encouraging. The fact that the nutritional status of more than 10cr households has been recorded by Anganwadi workers is remarkable, and the Rs 35,600cr proposed for nutrition-related programmes is a necessary development. A systematic, standardised framework will be essential for its effective implementation. Further, the Rs 28,600cr allocation for women-linked programmes is of particular importance in terms of reducing maternal mortality rates, and we welcome this proposal wholeheartedly.

Bomi Bhote, CEO, Ruby Hall Clinic

While there is a 10% rise in the overall allotment of the healthcare budget this year, it will clearly be offset against inflation. Under the Ayushman Bharat scheme, the vision of setting up empanelled hospitals in Tier II and Tier III cities is indeed a welcome move ensuring cost effective delivery of care in rural areas.

The government has also proposed the setting up of medical colleges in existing district hospitals under the Public Private Partnership (PPP) mode to address the shortage of qualified doctors which is laudable. But they also want special bridge courses to be designed for doctors wanting to practice abroad. Wouldn’t it be more sustainable to retain Indian talent here and allocate resources to this cause?

What’s encouraging is the fact that this year’s budget has recognised that concepts such as machine learning (ML) and artificial intelligence (AI) that will revolutionise the way we practice healthcare. Overall, this move will be critical for next-generation medicine in order to fulfil the healthcare aspirations of India.

Additionally, in my opinion, the move to increase unnecessary tax imports on medical devices to put more impetus on domestic medical device manufacturers will not help fund the capacity building of the healthcare sector.

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