March 5, 2018 Yes Institute

Budget 2018 to Enable Ease of Living

Author: Sidharth Sonawat, Fellow, YES Global Institute

India improved its ‘Ease of Doing Business’ ranking from 142 to 100 in 3 years, driven by relentless focus and gusto from the highest level of Government. On most economic indicators- GDP growth, per capital income and formalization of economy, India has shown consistent high growth over the last 3-4 years. Budget 2018 has sought to take this momentum to social sectors which are quintessential for raising living standards and actualize GDP gains for tangible benefits on the lives of common people.

The Government announced the National Health Protection Scheme to cover over 10 crore poor households or approximately 50 crore beneficiaries, providing coverage up to 5 lakh rupees per family per year for secondary and tertiary care hospitalization. This single step has the potential to transform the entire healthcare landscape of India:

First, this shall reduce the Out-of-Pocket (OOP) expenditure significantly which currently stands at 62%; consequently it shall be a lifeline to a large number of people (estimated at around 3% of the population) which slip into the BPL category due to catastrophic health expenditure every year.

Second, it shall unleash the latent demand for healthcare services in the country as the poor would now have the required purchasing power to access quality healthcare services. A quantum improvement in health seeking behaviour and healthcare indicators driven by demand for quality healthcare can be expected by this measure.

Next, the scheme shall pave the way towards universal health coverage over the medium term. Depending on the success and speed of execution of the proposed scheme, the goal of 100% coverage can be envisaged by extending the scope of the current scheme scope covering 40% of the population in a defined timeframe. Even in its current form, the scheme shall be one of the largest health protection schemes in the world.

Finally, this shall give a huge indirect boost to the healthcare sector with hospitals, medical device manufacturers, health insurance companies and allied healthcare businesses expected to benefit from the ramp up in demand for healthcare. It shall also create a large number of employment opportunities as healthcare is the fifth largest employer among all sectors both in terms of direct and indirect employment.

With this bold measure, the government has taken a decisive call on the payer vs. provider role dilemma in the healthcare ecosystem and a move to extend health insurance shall energise the entire ecosystem towards the targeted objectives of providing every Indian with accessible, affordable and quality healthcare.

Together with insurance led financing of secondary and tertiary care, Budget 2018 has also enhanced focus on primary and preventive care by increased focus on sub-centres and primary healthcare centres and inclusion of Non-communicable Diseases in the overall strategy of care.

Budget 2108 has also sought to boost other aspects of healthcare including medical education and health technology. The increase in the provision of medical education by up-gradation of 25 district hospitals medical colleges should be read in this respect. Another heartening aspect is the openness of the Government in acceptance and proactive approach to interventions like block chain and other digital technologies. The programs that will be led by NITI Aayog & Department of Science & Technology will promote open innovation and catalyze growth research & development and adoptions of technologies in public health, thereby generating super gains in efficiency and improving outcomes at the public system.

India was ranked 131st among 188 countries in the 2017 edition of the UNDP HDI Index. With several measures in healthcare and social security taken in Budget 2018, we can hope to achieve similar gains in the HDI index provided we are able to find the necessary financial resources to plug the huge gap in social spending. Moreover, it would require a huge exercise in consensus and coordination among the centre and states to reach the desired execution performance. The tenacity shown by all stakeholders in implementing economic reforms including GST have to be in full display to achieve similar success in the social space.