budget 2017

Post Budget: Happy Notes of Start-ups, Medical Device industry and Hospitals with the Released Budget

Rajeev Boudhankar

Government committed to take structural reform in medical education and practice, says FM, Arun Jaitley, as he released the must awaited Budget 2017 today.  FM also proposes to amend drug rules to ensure drugs available at reasonable price with some 1.5 lakh health sub-centres to be transformed to health wellness centres. He added, this is a great time when reputed hospitals should be encouraged to start giving medical education.

Further, he also announced pilot project for Aadhar cards containing health details for senior citizens. Medical device industry is going to see new rules soon, which will attract investment in sector, to reduce cost of the devices. For SC/ST there would be outcome-based monetary measures be given by NITI Aayog and allocation to Scheduled Castes upped to Rs 5.

Health Technology here comes with the reactions by the health industry experts…

Dr. Rajendra Patankar, COO, Nanavati Super Speciality Hospital, Mumbai

To a greater extent, the budget has succeeded in addressing the urgent issue of rationalization of expenditure in the health sector through several positive measures. Increased emphasis on use of generic medicines and large-scale availability of drugs at reasonable price points through the amendment of the Drugs and Cosmetics rules will bring a large section of the population within the gambit of affordable medical care and institutionalize the domestic healthcare sector. The announcement to formulate new rules for medical devices has the definite potential to scale down exorbitant costs of critical life-saving surgical procedures. Geriatric medical care is bound to get a huge boost with the health conditions of senior citizens monitored via Aadhar cards. By announcing 5,000 additional seats in government medical colleges, the government has positively initiated the move to narrow the growing doctor-patient demand supply gap in the country.

Dr. Rajeev Boudhankar, CEO, Bhatia Hospital

  • Rs 500 crore allocated to set up Mahila Shakti Kendras; Allocation raised from Rs 1.56 lakh crore to Rs 1.84 lakh crore for women & child welfare. This will help control malnutrition in the paediatric age group, help reduce maternal mortality rate and infant mortality rate. A welcome step.
  • 1.5 lakh health sub-centres will be transformed to health wellness centres. However, there is no clarity about how will they be different from the present health sub-centres or services provided by them.
  • Ensure availability of specialist doctors for strengthening secondary & tertiary healthcare therefore create additional 5000 seats for PG per annum, roll out DNB courses in big district hospitals, strengthen PG courses in select ESI and Municipal Hospitals & encourage reputed pvt hospitals to start D N B Courses in association with state govt. This is a right step in the right direction for stimulating tertiary healthcare and increasing the pool of specialist doctors. However, big time reforms in the medical education field are needed to make up for the short fall of doctors, nurses, technicians and paramedical staff.
  • On health, the government proposes to eliminate Kala-Azar & Filariasis by 2017; Leprosy by 2018; Measles by 2020; Tuberculosis by 2025. But this cannot be done on a piece-meal basis and will require public health education to supplement the preventive measures in the arena of public health. All previous Governments have tried doing this but have failed due to this piece-meal approach.
  • Two new AIIMS Hospitals to be set up in Jharkhand and Gujarat. There is a short fall of medical teachers due to disparity of earnings in the public sector w r t the private sector. Hence, short sighted measures like these will not be enough but overall reforms in medical education quality and pay parity is the right step. Government spending of at least 5% of overall GDP in the next five years should be aimed by the government. If health sector gets infrastructure status the fund flow from exte

    rnal commercial borrowing route will flow in this sector to boost infrastructure required for more hospitals in the private sector who are willing to start even under graduate medical colleges and post graduate DNB courses. However, this long standing demand of the healthcare sector was overlooked by the Finance Minister once again.

  • Amendment of drugs and cosmetic rules for use of generic drugs. Medical devices will also be included under price control. This will help in reducing overall healthcare costs to the common man. However, funds allocation for research in the Pharma sector would have helped develop new molecules especially for newer anti-microbial as India has the highest rate of drug resistance multi-nationals are reluctant are not investing in this field. ICMR research is also suffering due to dearth of funds which should have been done by the Finance Minister.
  • Digi-Gaon and rural electrification program- Tele-medicine will get a boost and the rural population will benefit in terms of decreased travel costs to bigger centres for health needs   health. A very welcome step.
  • Smart health cards through Aadhar for senior citizens will be a boon in the long run, if successfully implemented, for the aging population of the country.
  • Other important issues that did not get attention from the Finance Minister were-
  1. Greater provision for the National Rural Health Mission and National Urban Health Mission at least 50 thousand crores each.
  2. Promote Health Insurance penetration throughout the country through local post offices and Aadhar card centres.
  3. Direct tax benefits for capital expenditure, a 10-year tax holiday for hospital projects
  • Exemption from GST Budget Recommendations
  • The New health protection scheme of last budget should have been extended to provide health cover up to Rs 3 lakhs per family for all families below the poverty line with an additional top-up package up to Rs.1 lakhs for senior citizens.
  • Preventive Health Check-ups Tax exemption on preventive health check-up should have been raised from the current Rs. 5,000 to a maximum of Rs. 20,000 under section 80-D of the Act.
  • Increasing the Tax Exemption on Medical Expenses- The current tax exemption limit of Rs. 15,000 per annum towards reimbursement of medical expenditure by the employer is inadequate in comparison with the medical expenses incurred by the taxpayer and needed to be increased to at least Rs. 50,000 per annum.
  • Exemption from Input Service Tax -Clinical Establishments are indirectly being subject to levy of service tax for use of various services which in fact increase the cost of treatment of medical services. Scope of healthcare support services should have been expanded to include pathological services, dermatology, infrastructure and logistics support, in order to reduce the input tax.
  • Tax Incentives(i) Should have Extended the benefit of deduction under Section 35AD of the Act to a 50 bedded specialty center which is focused on treatment of Non-communicable diseases (‘NCDs’). (ii) The healthcare business by its very nature needs to make continuous investments to upgrade existing capabilities. It was imperative to provide for a tax incentive in terms of substantial expansion to upgrade existing capabilities in an existing hospital. The Minister should have recommended that the deduction under section 35AD of the Act may be extended to provide benefits to hospital incurring substantial expansion.
  • Tax Incentives for Specified Activities Tax incentives should have been provided for the following activities:- (i) Digitization – To boost the ‘Digital India’ initiative of the government, financial incentives/grants should have been provided to institutions that are willing to move towards maintenance of Electronic Health Records (EHR) and Health IT Systems. 250% deduction on investment made for the implementation of EHR should have been extended.
  • Accreditation – To incentivize hospitals and diagnostic laboratories to undergo accreditation, there should have  been 100% deduction on approved expenditure incurred for securing accreditation from National Accreditation Board for Hospitals and Healthcare Providers (NABH) and National Accreditation Board for Testing and Calibration of Laboratories (NABL) respectively.
  • Remote care – 250% deduction for approved expenditure incurred on operating technology enabled healthcare services like telemedicine, remote radiology etc. should have been allowed for improving accessibility, affordability & quality healthcare in remote areas.

 

Mudit Vijayvergiya, Co-founder, Curofy

Being a startup we are happy to hear that government has decided to relax the income tax liabilities applied on startups. The profit deduction period for entrepreneurial juggernauts has also been increased from the previous three out of five years. The startups can now claim 100 percent deduction of profits for three out of the first seven years.”

Since the cost of life-saving drugs will reduce, and make it available to the poor section of the society at a reasonable price. The government has already brought coronary stents under price control and asked the National Pharmaceutical Pricing Authority to fix its ceiling price. Not only drugs but these rules will also be formulated on medical devices, which will help in reducing costs of such devices and this will attract investors internationally.

Varun Khanna, Chairman of AdvaMed India Working Group and Executive Committee, and MD, BD India,

“The budget provides a feel good factor for the medical devices and healthcare sector. We are encouraged to see that healthcare has been given its due attention in the Union Budget this year. The increase in health expenditure by 20 percent reflects greatly on the government’s intent to prioritize healthcare in India. This can be a key determinant of an ecosystem that is better equipped to provide comprehensive healthcare to all. AdvaMed also welcomes the government’s resolve to eliminate TB by 2025 and increase in funding for women and child welfare to Rs 1,84,362 crore. There is still a greater need to invest in screening and preventive measures for addressing the growing TB burden. The government’s recognition of the need to strengthen healthcare infrastructure by building capacity is also showcased in their move to increase health expenditure by 20 percent, as well as introduce two new AIIMS centres, add 5,000 PG seats for medical sciences and transform 1.5 lakh health sub-centres into health wellness centres. While these measures are a step in the right direction, NCDs that account for 53% of the disease burden should have been prioritized.

Moreover, abolishing FIPB shows India more welcoming of FDI and relaxation of protectionist barriers. AdvaMed welcomes the government’s plan to internationally harmonize the new medical device rules and attract investment into the medical device sector. This showcases recognition of the role of medical devices in meeting the healthcare needs of India’s population. While the budget exhibited many positives, the Finance Minister could have done more to bring the much-needed momentum in the growth of the country as a med tech hub and a leading global destination for life sciences. The association is disappointed as the budget missed out on addressing higher import duties deterring introduction of innovative and high-quality devices for better patient care in India. We were hoping for excise duty reduction on medical devices in areas of critical care and duty reductions to  life saving technologies to reduce the cost of treatment and burden on patients.

Our industry continues to urge the government of India to implement a separate regulatory framework for the medical devices sector which will enable international and domestic manufacturers better address the needs – availability, affordability and access – of Indian patients and give the much needed fillip to the sector.”

Rajesh Mundra, Founder & CEO, Truworth Wellness

From the Health & Wellness companies point of view the two significant proposals are –

“1. Upgrading 1.5 lakh Primary Health Centers to Health and Wellness Center which I believe would focus on Chronic Diseases Screening, Care and Management thus reducing burden on Secondary Health Centers.

2.  Setting up of Digi Gaons with tele-medicine centers. This would help increasing the reach of tele-health companies to the rural market as well, thus providing quality care to the bottom of pyramid.

The other significant proposal is regarding new rules for Medical Devices that we hope would not compromise on quality in view of the reduction of the costs.

Apart from that the expectations of increasing health insurance and preventive health deduction limits have not been met in this year’s budget”.

New initiatives for Startup Growth

“There is a good news for startups as the 3 years profit window has been raised from 5 to 7 years and also the MAT carry forward has been increased to 15 years from 10 years. Also the reduction of corporate tax to 25% for companies with turnover upto 50 Crores is cheerful.”

Chirag Patel, CEO – KOOH Sports

The budget for the first time addressed well being of the nation by changing health centres to well being centres and this is good sign for the health and fitness sector in general and sports in particular. Recognition is the first step to trigger change. Also a further boost on skilling is welcome if we have to create jobs to effect transformation in sports outcomes.

 

Ashish Girdhar, Director-Enocean Intellectual Solutions (Aerate air purifiers)

The new union budget brought lots of hope for Small and Medium enterprises. Cut in corporate tax has done great relief and increased motivation. Tax exempt support for Startup will boost growth and motivate new entrepreneurs. Air Purification industry is a very new in India and it will help Medium and small startup in this business to investment more in innovation and technology and less tax will help in sustainability.

Amit Munjal, CEO & Founder at Doctor Insta

We are welcoming the move taken by the union finance minister Arun Jaitely. The Budget has shown a clear indicator by the Government to bring redical changes in the healthcare sector. Moving to the digital payments ‘Digi Gaon’ initiative will help the companies like us to provide the facilities of telemedicine, mhealth through digital technology across country. The idea of the reduction in corporate tax for MSMEs having revenues less than 50 crores will help the companies to prosper in the segment. Keeping startups in mind the government has relaxed external commercial borrowings which is going to spark a new energy among the startups in health space and will generate healthy job opportunities in future.

Vinod Giri, CEO & Founder at DialDent

The union budget 2017-18 has come up with many great things for the healthcare and startup industry. The Bharat Net project of the government deserves applause since it will enable

the startups in healthcare space to connect with the rural population. The idea of the reduction in corporate tax for MSMEs having revenues less than 50 crores will help the companies to prosper in the segment. I thank the Finance Minister Shri Arun Jaitley for relaxing the external commercial borrowing system. The healthcare sector is likely to witness a spike with this good budget.

Kalpana Sampat, CEO, Swiss Re India Branch

“Increasing allocations for Fasal Bima Yojana and targeting greater insurance coverage is a positive move to close the protection gap in agriculture. A robust crop insurance framework is an important stepping stone towards food security and financial stability for farmers. Efficient irrigation is the need of the hour and the dedicated micro-irrigation fund is also a welcome move. Finally, the health action plan is an important acknowledgment that the country needs to improve access to health care.”

Abhishek Dwevedi , Co-founder, Alternacare 
 
As a startup we appreciate the initiative took by the government to relax the income tax liabilities applied on startups. The profit deduction period for entrepreneurs has also been increased from the previous three out of five years. 100 percent deduction of profits for three out of the first seven years which can be claimed easily.”

1.5 lakh health sub centres to be converted to Health Wellness Centers which will surely grow the preventive care inclination in the country. Now medical devices will be devised to reduce their cost which is an another big step to lower the cost of medical expenses in tertiary care, as lakhs of people move down the economic layer due to their expense on health every year.

 
The push towards digital payments (by making online transactions tax free) would bring more people to consume internet and hence a it would support the entrepreneurs solving inefficiencies in healthcare, food, finance, retail, supply chain, etc using technology. Not only this, using BHIM app, people with no credit debit cards can also transact using this app. This move is also a boon in the startup ecosystem by the government.
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