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Budget 2019: Pharma seeks research push; healthcare for GST rationalisation

The expectations for some radical or path breaking policy announcements are dim, largely because it is to be a vote-on-account budget. On healthcare, major concerns revolved around Goods and Services Tax.

Budget 2019: Pharma seeks research push; healthcare for GST rationalisation

Pharmaceutical and healthcare sector is not expecting much from this Union budget but they do have a wishlist on what the budget could do to address a few pain points. The expectations for some radical or path breaking policy announcements are dim, largely because it is to be a vote-on-account budget. When Business Today asked Satish Reddy, chairman, Dr Reddy's on what was troubling the industry at the moment and what it hopes to see in the budget, he says, there are two things weighing in the minds of people within the pharmaceutical sector today. These being the view on the way ahead on schemes slated to expire in 2020 like the MEIS (Merchandise Export from India Scheme) and weighted deduction on research and development (R&D). The MEIS, under which incentives are given to exporters, is expected to expire in March 2020 and so is the provision to provide weighted deduction on R&D expenses.

Reddy and most other business leaders feel ideally a scheme like the MEIS should be extended. As for weighted deduction on R&D, the feeling across-the-board is in favour of not only increasing the benefit to 200 per cent, as was the case earlier before it was made 150 per cent, but to also expand its scope to include all the nuances of R&D. This was felt critical for providing the much-needed impetus to research and innovation.  

On healthcare, major concerns revolved around Goods and Services Tax (GST). "There is a need for GST rationalisation because on the input cost, we do not have a set off and it is making healthcare expensive,'' said Suneeta Reddy, managing director, Apollo Hospitals Enterprise. In line with the government's thoughts on increasing access and affordability of healthcare, she felt, those who supply inputs to healthcare should be exempt from GST as the healthcare providers are not allowed to recover this from patients and there is no set off.  It is like paying rent when buying consumables because GST is paid but not recovered. The argument being that it dents their margins and in turn impacts their ability to build free cash flow for investment into technology upgradation and for maintaining quality. The other point, she says, is that the budget should also bring back the Section 35AD, providing 150 per cent accelerated depreciation provision since it provides the incentive investments into new projects. The key point apparently is to address issues around ways to bring down the costs for the healthcare providers.

In fact, Dr B S Ajai Kumar, chairman and CEO of HealthCare Global Enterprises (HCG), a leading chain in cancer care, listed out some deeper areas of concern. He said, "As a country, we need to substantially increase healthcare budgets. Our per person average healthcare spend is $85, which is among the lowest if compared to other countries.'' He also pointed out while Ayushman Bharat is a positive step towards universal healthcare in India, it needs to accommodate tertiary care in its scheme of things. Under the scheme currently, tertiary healthcare service providers will be forced to cut cost at every level to cater to Ayushman patients and the outcome might be affected.''

The upcoming budget, he felt, should reflect a break-up of the benefits Ayushman Bharat extends to private entities as currently there are multiple restrictions to extend quality treatment to an Ayushman patient. Besides, healthcare service providers should be mandated to publish outcomes to demonstrate the essence of quality and world-class healthcare, he added.

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