With Budget round the corner and health being one of the priority areas, sources indicate that the government is contemplating hiking health and education cess by up to two percent to fund healthcare expenditure.

People in the know of the development, however, did say that the Revenue Department of the Finance Ministry is reviewing such a proposal currently and deliberations are still underway and no decision has been taken so far.

It is noteworthy that currently, four percent health and education cess is levied on the direct income tax, irrespective of the income tax slab.

Now, according to sources, “a hike ranging between 0-2% may be announced by Finance Minister Nirmala Sitharaman, if the proposal goes through in the deliberations and gets a formal nod at the highest political level.”

Currently, the health and education cess garner approximately around Rs 30,000 crore.

Sources further shared that the proposal is also part of the wish list presented by the Health Ministry to the Finance Ministry as they feel, this is a dedicated window where funds collected can be spent only for health and education purposes.

Meanwhile, sources also added that apart from this, Finance Ministry is also in favour of increasing health insurance cover under Ayushmaan Bharat.

Under PMJAY – Pradhan Mantri Jann Aarogya Yojana, the government gives an annual health insurance cover of Rs 5 lakh per family.

“The proposal is to see by how much more the cover can be enhanced and if possible then more coverage can be done, in terms of more families getting the insurance benefit. Here also the discussions and assessments are still on-going and might get finalised in a day or two,” sources added.

Currently, this insurance cover under PMJAY is given to approximately 10.74 crore poor and vulnerable families, identified as per the SECC 2011 data, which is approximately 40 percent of the Indian population.

The government is also likely to give more budgetary allocation for creating more ICU beds in existing hospitals in rural areas, new hospitals & dispensaries, improving cold chains, critical care hospital blocks, health & wellness centres, improved surveillance of disease outbreak & response, diagnostic labs, sources added.

“Here the government might like to go with the VGF – viability gap funding route to push the creation of health infrastructure with partnership from private players,” sources added.

The government under Aatmanirbhar Swasth Bharat Yojana had announced a 5-year outlay of approximately Rs 65000 crore, where it was said that the funds will be used for creating health infrastructure.

“The Finance minister, in her budget speech is also likely to make a special mention for health and frontline workers, honouring their hard work and the duty they have performed in saving lakhs of lives during the pandemic,” sources added.

The government is also likely to be sensitive towards the vaccine that has been introduced in the fight against novel coronavirus, sources added.

“Deliberations are going on to see how to include a scheme for free vaccine for those below the poverty line, the expenditure department is currently assessing the likely expenditure required for such a scheme. The idea moved here is whether centre alone should pay up. The government is in favour of an equal partnership between states and centre to pay for this scheme. The contours are still on the drawing board and are yet to get finalised, a decision to launch this scheme will be dependent on the revenue position of the government as states are too working on limited funds,” sources added.

A few states have already announced free vaccine for their population including West Bengal and Delhi, in the recent past.

Last year, the Budget had estimated an allocation of around Rs 67000 crore, which was about 4 percent hike from the year before, for the Department of Health and Family Welfare and Department of Health Research.

It has also been learnt from sources that the 15th Finance Commission too has pitched for enhancing expenditure on health to 2.5 percent of GDP in the long run.

Experts say that if such a decision is taken then it will be a move in the right direction.

“The budget for FY 21-22 is an opportunity to reiterate a strategic direction for the health sector and align expenditure with key priorities like strengthening primary care, enhancing access to secondary and tertiary care. These can be done through the expansion of current public infrastructure capacity as well as through strategic sourcing from the private sector. Further investments in digital technologies by leveraging the vibrant innovation ecosystem in the country and strengthening and empowering human resources in the health sector. Atmanirbhar Swasth Bharat Yojana launched by the Govt of India is a step in the right direction and now should focus on the framework for implementation of this project,” Kaustabh Basu, Executive Director -Social Sector, PwC India said.

(Edited by : Aditi Gautam)

First Published:Jan 22, 2021 6:03 PM IST