[Opinion] Indian Union Budget 2024 | A Half-Hearted Boost to Healthcare

Jimit Shah – [2024] 166 taxmann.com 188 (Article)

The Indian Union Budget 2024, unveiled on 23 July which left the healthcare sector underwhelmed and unfulfilled, missing the mark on several critical fronts is now codified as a law by receiving president’s assent without any variation. Despite a few commendable proposals, such as the exemption of life saving specified cancer drugs (like Trastuzumab Deruxtecan, Osimertinib and Durvalumab) and on polyethylene for manufacture of orthopedic implants from Customs duties, which will undoubtedly make these drugs more affordable, the Budget proposals overall fell short of addressing the deeper, more pressing needs of the sector. The increased allocation for the Ayushman Bharat scheme and the focus on digital health improvements, particularly beneficial for rural areas, are steps in the right direction. However, these positives are overshadowed by significant shortcomings.

The allocation for healthcare not only remains short of the industry expectations but also short of the target set by the National Health Policy of India 2017 of 2.5% of the GDP, starkly below the global average, signaling an insufficient commitment to transforming the sector. The Budget also overlooked private healthcare providers grappling with soaring operational costs and regulatory hurdles, offering them no relief. Moreover, mental health, a crucial component of overall health, is glaringly neglected, with no substantial allocations or initiatives.

The absence of targeted income-tax benefits for the research and development sector continues to hinder innovation by neglecting the critical needs of researchers and innovators. Specifically, the Budget failed to introduce concessional tax rates for new research initiatives or to reinstate weighted deductions, which would have incentivized investment in R&D. Moreover, there has been no progress in clarifying the tax treatment of free samples and low-value items, nor in addressing the prevailing ambiguities within the tax regulations.

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