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PC allocated Rs 21,229 crore in the 2013-2014 budget, a 24% increase over the allocation to NRHM in 2012-2013 budget.

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Budget 2013: Inflation to offsets 22% rise in healthcare allocation

Budget 2013: Increasing expenditure and waiver on customs duty will boost healthcare sector.

Budget 2013: Top takeaways from healthcare sector.

Increasing expenditure on healthcare and healthcare infrastructure is something which the industry is looking forward during the Union Budget 2013 to help it grow.

Healthcare cos pin hope on National Health Mission
Health sector gets a meagre rise in allocation
Proposals not encouraging for biotech sector: Expert
Top takeaways for healthcare sector
Budget could have delivered more for healthcare

Other provisions such as making expenditure on health check ups entirely tax deductible, increasing the limit on the deduction of medical insurance premium and a waiver on customs duty on imported medical equipments are measures which could boost an industry which is now spreading wings.

Drug makers do not expect any major sops in the Union Budget 2013. Raising the weighted deduction on Research and Development(R&D) expenditure to provide a fillip to such activities is something that the industry desire during almost every budget.

Observing that India’s life science industry is poised for spectacular growth and international participation, Corporate America has sought major reforms in the country’s health sector including FDI and global collaboration in life sciences.

In a pre-budget memorandum, submitted to the Union Finance Minister, P Chidambaram, the US India Business Council (USIBC) said it was concerned over the several recent policy initiatives of the Indian Government in this regard.

USIBC said the industry has several serious concerns regarding intellectual property.

The Organisation of Pharmaceutical Producers of India also wants several adjustments in the Budget. Some of them include rationalisation of customs duty, customs duty exemption to life saving drugs, cut in customs duty for import of drugs and much more. Union Budget turns out to be a disappointment for healthcare and pharmaceutical industry. Most of them believe a rise in the healthcare sector spending gets offsets by rising inflation.

Vadodara-based BAPS Hospital’s chief executive officer, Neeraj Lal, points out the increase in the healthcare allocation by 22% would get offset by spiraling inflation. “Where is the actual increase in healthcare spending?” asks Mr Lal.

Finance Minister P Chidambaram earmarked Rs 37,330 crore for the sector in the next financial year 2013-14 budget, up from Rs 30,702 crore in the current fiscal, thus a rise of 22% in allocation.

As per RBI data, Wholesale-price inflation decelerated to 7.18% in December from 7.24% in the preceding month, while retail inflation increased to 10.56% in December from 9.9% a month earlier. Even a recent proposed freight hike in the Railway budget by 5.7% for hauling coal could have an adverse effect on the electricity bills – which like diesel and LPG may go up marginally thus further adding to the inflation.

According to Mr Neeraj Lal, this budget is disappointing as it does not provided any sop or incentives for medical implants and medi-technology companies for setting up joint venture or technical collaboration for producing hi-tech equipments or implants locally. “Foreign made equipments or implants are nearly 50% costlier, thus inflates the healthcare cost” he adds.

“This budget does not have any substantial growth impetus for healthcare sector” observes Jayesh Shah, Chief financial officer, Intas Pharmaceuticals. “It’s a hopeless budget for healthcare sector” says J R Vyas, managing director, Dishman PharmaceuticalsBSE -0.94 % adding that at least government should have given a special subsidized medicine programme for the poor.

Even diagnostic companies are unmoved by these budget. “Considering the fact that private sector serves 75% of the healthcare diagnosticsBSE 0.96 % responsibility for the country, the Union Budget has yet again missed the opportunity to recognize the role of the private sector” said Dr. Sanjeev Chaudhry, managing director, SRL Diagnostics. According to Mr Chaudhry, the long standing healthcare diagnostic industry demands for providing fiscal relief for consumables and tax incentives for accreditation have yet been given amiss.

“Disappointing budget for healthcare” that all Chirag Doshi, chairman of Indian Drug Manufacturers Association (IDMA) Gujarat’s chapter had to say. He pointed out that the rise in healthcare allocation is been offsets by inflation.

“We have expected reduction in excise duty” says Mr Doshi, adding that this would have really helped to bring down the drug prices. He also added that if abatement which is right now 35% on drug MRP (maximum retail price), would have increased to 50% in this budget, then it could have allowed further drop in the medicine prices.

Hitest Sharma, partner & national leader, Ernst & Young (E&Y), says “Not much for the pharma or the healthcare sector in the budget.” He further says that the increase in surcharge from 5 to 10% and increase in royalty rates of tax from 10 to 25% (subject to double tax treaty relief) will impact the pharma sector negatively.

According to E&Y, the excise duty on MRP basis (with abatement of 35%) for ayurvedic, unani, bio chemicBSE -4.89 %, Siddha and Homeopath medicines, aligns these areas with the present regime for the pharma sector. Most demands of the sector like tax holiday period increase for healthcare, GST roll out, service tax exemption for clinical trials activity, etc have not been addressed in the budget.Presenting his eighth Union Budget, Finance Minister P Chidambaram in his budget 2013 speech gave emphasis to the healthcare sector. Increasing expenditure on healthcare and healthcare infrastructure will boost the industry and help it grow.

Here are the key takeaways from the healthcare sector:

National Health Mission. inclusive of national flagship programme National Rural Health Mission(NRHM) and National Urban Health Mission allocated Rs 21,229 crore in the 2013-2014 budget, a 24% increase over the allocation to NRHM in 2012-2013 budget.

A national programme for the elderly launched under which 8 geriatric centres would be set up with an allocation of Rs 150 crore.

The department for alternative system of medicine or the AYUSH has been allocated Rs 1061 crore.

The six AIIMS like institute, to be commissioned by 2014 have been granted Rs 1650 crore.

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Pharmaleaders is India’s first opinion based & research driven bi-monthly magazine & has a decade of relentless reporting in Pharma Journalism in an unbiased, fearless & independent way. Over the last one decade, The Magazine has covered some of the biggest voices in the healthcare Industry. Available both in digital & printed format, Pharmaleaders has emerged out as a leading title in voicing the opinion of the healthcare industry.

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