Union Budget 2021
Every year, we bring the rundown of the Union Budget from the lens of the startup ecosystem through a mix of pre and post budget coverage showcasing the expectations and impact on the ecosystem.
India has always been a laggard in healthcare expenditure. The healthcare allocation in the Union Budget 2020-21 was INR 67,484 Cr, a meagre 5.7% rise from the revised estimate of INR 63,830 Cr in the previous year. Interestingly, when Finance Minister Nirmala Sitharaman presented last year’s Budget in Parliament with that healthcare allocation in place, the Covid-19 pandemic had already knocked on the country’s door. The government’s spending on healthcare was mostly sinusoidal, peaking at 1.3% of GDP and hitting a trough of 0.95% against a target of 2.5% that the National Policy on Health, 2017, had aspired for.
The low expenditure in this critical sector is much below international norms, observed the 15th Finance Commission in its annual report 2020-21.
To overcome the challenges of low public investments, the government must focus on enabling private investments in the fast-emerging healthtech sector. However, the lack of regulatory guidelines and the inadequacy of tech-based healthcare infrastructure are some of the crucial factors hindering the funding and growth in the healthtech space. According to Inc42 Plus, Indian healthtech startups raised $2.3 Bn between January 2014 and March 2020 across 459 deals.
Sadly, it took the government a full-blown pandemic to release its telemedicine guidelines. But that too, is not enough. Healthtech experts and startup founders have told Inc42 the impact will be limited as a bunch of regulatory reforms such as the e-pharmacy policy, Digital information Security in Healthcare, Act (DISHA) and more are still pending.
With the National Health Stack, a set of essential APIs for India’s digital healthcare infrastructure requirements, getting in place, the e-healthcare segment should see exponential growth, but the hurdles it faces cannot be ignored, either. The healthtech startups want the government to play the role of an enabler in building the healthtech ecosystem across rural India. Besides, the government needs to work on taxation, provide funds to promote specific segments such as healthtech R&D and mental health, and ensure skill development to meet the country’s burgeoning healthcare needs. Here is a look at what all will be needed for smooth delivery of healthcare services.
Bridge The Gap Between Urban And Rural Healthtech Infrastructure
India is home to more than 3.5K healthtech startups. But during Covid-19 fallout and the following lockdowns, both healthcare services and the pan-India supply chain were deeply affected. However, healthtech startups managed to cope with the new normal and expanded their capacity exponentially within a short period to cater to the growing demand. For instance, e-healthcare platforms like Practo witnessed more than 600% growth in online consultations after lockdown.
Nevertheless, healthtech companies need a certain level of clinical and infrastructural support to operate optimally. But when it comes to rural India, there is a huge scarcity of doctors and a pronounced lack of digital infrastructure.
Although 75% of the Indian population resides in rural areas, the healthcare concentration is heavily skewed towards urban areas. According to Meena Ganesh, MD and CEO of Portea Medical, a consumer healthcare platform, this is the time to look back at the weak links in India’s healthcare ecosystem as exposed by the pandemic and cover the gaps in infrastructure, facilities and financial provisions in the upcoming budget. The major challenge that needs to be addressed through infrastructure is the gaping rural-urban divide in healthcare.
The lack of adequate healthcare facilities in rural areas often drives patients and their families to major cities, leading to additional expenses and the loss of wages for days or even months. So, the rural segment is where healthcare delivery is required most through technology-driven measures.
“To make this happen, the government must ramp up both medical and training infrastructure in a big way. The best and the fastest way to ensure quality healthcare access in rural India is through e-health/e-medicine services. Also, funds must be allocated towards skills development of doctors-teachers, nurses, paramedical staff and caregivers,” say Ganesh.
Primary healthcare in India has been systematically neglected over the years. But the pandemic has made it essential to ensure urgent deployment of healthcare services across the country and a spending push by the government. Around 69% of Indian citizens reside in Tier II and Tier III cities, but most of the private healthcare players are congregated in metros, points out Amritah Sandhu, founder and director of CareIndia Health, a wellness pharmacy. “The government must plan to improve primary healthcare infrastructure in those locations. It may be advantageous to work alongside private players and ensure that doctors are actually present in the facilities there. Private players can be incentivised, both financially and in terms of easier regulations, to take up this challenge,” she says.
Allocate Funds For Skill Development, eHealth Essentials
The country’s low doctor-patient ratio – one allopathic doctor for every 1,457 people, falls much below the WHO norm of 1:1000, and results in poor healthcare. Similar is the case with other medical support staff.
Nilesh Aggarwal, director and CEO of Medtalks, a healthcare learning and patient education platform, says the upcoming Union Budget needs to focus on increasing the number of trained healthcare professionals. There is a severe crunch of qualified doctors, nurses, hospital attendants and mental health professionals in the country. The government should build training and development infrastructure to create many more skilled healthcare professionals and facilitate skill enhancement of the current workforce to meet the post-pandemic needs.
Shumita Kakkar, founder and CEO of United We Care, an online platform addressing mental illness, says an initiative must be taken to facilitate education and training for mental health counsellors, psychiatrists and other advisors to create a large number of specialists.
Besides, the government must support R&D projects in healthtech, given the risk of failure and the time consumed in such cases as strict norms have to be followed in this sector, say startup founders.
Welcoming the Ayushman Bharat programme for universal health coverage, Harshit Jain, founder and CEO of Doceree, says that the concept of Health IDs will be another timely measure, and it must not remain on paper or get delayed due to red tape. In the upcoming budget, all healthcare allocations and their timelines should be announced so that they get implemented in an organised manner. That is how India will move one step closer to realising its vision of accessible and affordable healthcare.
Create Opportunities For Startups In Healthcare PPP Projects
Several healthcare issues like skill development or tech-driven innovations can be resolved fast by collaborating with the private sector and startups, in particular. According to Kakkar, the government can expand mental health coverage by collaborating with relevant digital platforms and effectively supporting the wellness of hundreds of millions of people. Also, startups should be incentivised for developing and integrating cutting-edge technology.
“There is a need to integrate technology-driven startups in the government’s action plan to boost the physical, mental and financial health of the public. There must be a multi-pronged approach. The government should ensure that cheaper finances are available to e-platforms, make foreign and institutional investments simpler and more attractive and provide policy support to startups,” she adds.
Ganesh of Portea concurs, asking for more budget allocations for the development of telemedicine and the home-based healthcare ecosystem. More importantly, the government should accelerate the public-private partnership (PPP) model in a more effective manner to harness all available resources to cover the entire country.
“By developing an alternative, on-demand home healthcare system, we can reduce the burden on institutional healthcare. Investing in out-of-home healthcare is less cost-intensive than building and maintaining new hospitals, and the system can leverage available resources to cover a large number of patients and healthcare seekers,” says Ganesh.
Expecting a surge in the budget allocation this year, Gaurav Gupta, cofounder of Navia Life Care, wants the government to set up a shared digital infrastructure for leveraging both public and private enterprises and asks for a policy push to implement the same under the National Digital Health Mission (NDHM).
Government Must Resolve Supply Chain Issues
India’s large-scale import dependency, with China as its key supplier, is another cause of concern. Sandhu of CareIndia stresses the need to incentivise local manufacturing, saying that the government has allocated INR 7,000 Cr over the next eight years to revive the API industry. As of 2019, India imported 70% of the APIs from China. To come out of these import clutches, the country must focus on building bulk drug parks, fermentation plants and more subsidies.
“Moreover, India is home to an estimated 77 Mn diabetics, making us the diabetes capital of the world. So, the government needs to stress the importance of holistic wellness for managing lifestyle diseases better. The country requires many more general physicians (GPs) practising and residing in Tier II and Tier III cities. In fact, a system should be in place for GPs to be the first point of care before a patient consults a specialist. It is impossible to reduce our disease burden without a robust primary healthcare system, which requires GPs. Their offices can also help with awareness programmes on hygiene and nutrition, reproductive health, HPV vaccine, PCOS (polycystic ovary syndrome), cervical cancer and other health-related issues,” says Sandhu.
Citing the increasing geopolitical conflict between Indian and China, Medtalks founder Aggarwal demands that the government should set up a local ecosystem for developing and manufacturing medical devices, bulk drugs and other clinical products as part of the vocal-for-local campaign.
“The medical device and pharma sectors in India largely depend on China for imports. So, we expect the government to support Indian companies to fulfil these requirements. This is a great opportunity for the Indian healthcare sector to replace China as the global hub of commerce. But for that to happen, the government must provide adequate financial help,” he says.
Vikas Bagaria, founder of the personal healthcare startup Pee Safe, also points out how imports were hit after the outbreak of the pandemic and how Indian and global supply chains are moving away from China.
“Growth in foreign investments, coupled with an uptick in innovations by Indian startups, can make the country the next economic powerhouse, he says.
Needed: Tax Exemptions and GST Relief
Pee Safe’s Bagaria says the country needs equal, easy and affordable access to quality healthcare, but hints that the complexity of its current tax regime may throw a spanner in the works. As far as taxes are concerned, the provisions already drafted must not be subjected to major changes for at least three years. This will help reduce the compliance burden on startups. However, corrective changes need to be done to make implementation easier, he adds.
Shilpa Ambre, CFO of SARVA, a yoga and wellness ecosystem, is also hoping for a tax revision. “As of now, most of us are paying 18% GST, which is quite high. But we hope this will be corrected in the upcoming budget, given the rising importance of wellness as part of one’s essential lifestyle instead of being considered as a vanity metric.”
Expecting the government to introduce more incentives, which may encourage companies to make wellness mandatory at the workplace, Ambre recommends tax exemptions for individuals who invest in their wellness. Corporates, too, should benefit if they spend on their employees’ health and wellness.