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Kochhar & Co. - Budget Highlights 2020-21 series newsletter on Healthcare & Pharma Sector update 

by Shahid Khan, Shampa Bhattacharya

Published: March, 2020

Submission: March, 2020


The Finance Minister Smt. Nirmala Sitharaman envisages a holistic vision of healthcare that translates into wellness of the citizen.

Key announcements

Budget allocation

  • A budget allocation of INR 69,000 crores has been made in the health sector, inclusive of INR 6400 crores for Ayushman Bharat, Prime Minister Jan Arogya Yojana (‘PMJAY’)
  • National Health Mission allocated INR 33,451 crores in 2020 with a slight increase from the allocation last year of INR 33651 crore, focussing on medical academic institutions
  • Under Pardhan Mantri Swasthya Suraksha Yojana (‘PMSSY’), the allocation saw a significant increase of 51% from INR 4000 crores in 2019 to INR 6020 crores in 2020
  • Development of pharmaceutical industry with a whopping increase of budget estimate form INR 3.4 crore in 2019 to INR 42 crore in 2020-21

Stimuli for strengthening healthcare infrastructure

  • Setting up hospitals under public-private partnership (‘PPP’) with a focus on those areas which are not empanelled under PMJAY
  • Setting up Viability Gap funding window for building a hospital in PPP mode

Focus on usage of Artificial Intelligence (AI) and machine learning (ML)

AI and MI shall aim to create and provide a focussed preventive regime for diseases

Aiming for Tuberculosis elimination by 2025

Covering shortage of qualified medical doctors, specialist and improving skill sets of support staff

  • Proposal to attach medical colleges to districts hospital in PPP mode; States attaching hospitals to medical colleges and providing land at concessional rates shall be eligible to receive Viable GAP Funding;
  • Resident doctor diploma courses to be offered under National Board of Examinations
  • Medical special bridge courses shall be implemented to raise the skill level of support staff, nurses, caregivers, paramedical staff for serving abroad

Proposal to expand affordable and accessible medical supplies

  • Easy accessibility of medical supplies with expansion of Jan Aushadhi Kendra Scheme to all districts offering 2000 medicines and 300 surgicals by 2024

Indirect tax

  • Health cess imposed at the rate of 5% ad valorem on import of medical equipment’s w.e.f. 2 February 2002. However, inputs/ parts used for manufacturing such devices are exempt from such levy;
  • Customs duty exemption withdrawn on instruments for physically handicapped patients, used for joint replacements and spinal instruments.
  • Strict provisions introduced for verification and satisfying eligibility for claiming exemption under Free Trade Agreements

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