Editorial: Budgeting for a healthy nation

Chennai

With just hours to go before the annual budget for 2021-22, the government has the tough task of a financial planning exercise that is drastically different one from the one it undertook the same time last year. This is because, at the start of 2020, India was at the cusp of being one of the fastest-growing economies. And even if one were to overlook challenges in the manufacturing sector and over-dependence on China for imports, the Narendra Modi-led government was working towards self-reliance — the dream of any developing nation.

Cut to 2021, the post-pandemic battering caused India’s economy to contract alarmingly — possibly the biggest contraction since the 50’s — and it’s not going to be an easy task to navigate the potential downturn. All eyes will be on Finance Minister Nirmala Sitharaman, who armed with her virtual bahi khata, is expected to show the blueprint to rebuild, reboot and restructure a flailing GDP.

What can we expect from the Budget of 21-22? Without a doubt, the key allocation would have to be infrastructure. After lockdown, both social and economic infrastructure needs urgent attention. Despite infrastructure being a key driver of the economy, the spend has traditionally been less than 10 per cent of the GDP, and, likely, even a significantly higher allocation in the upcoming budget would only serve to bridge the infrastructure deficit in Sitharaman’s rebuild agenda rather than create room for future growth.

One can expect a change in tax structure, if not minor tax cuts, as it’s very likely that some reduction in taxes for the lower-income groups would help boost spending, which is important to reboot the economy. Another sector that one would like to see increased thrust in is the electric vehicles segment. Tamil Nadu’s move to introduce public transport in the form of e-bikes is a move in the right direction. With fuel costs skyrocketing and pollution being a growing problem, the time is right to move aggressively and implement a government-led programme to sustain manufacturing and promote the use of e-vehicles.

The biggest wake-up call for India remains the healthcare sector. In the backdrop of the COVID-19 pandemic that has claimed over 20 lakh lives globally, the virus brought into focus the need for the government to ensure the sector gets sufficient budgetary allocations to not just improve, but also offer better quality treatment at affordable rates. India’s spend on healthcare has been among the lowest in the BRICS and OECD nations. Even with an allocation of Rs. 69,000 crore towards the sector in Budget 2020-21, the healthcare spending was a mere 1.28 per cent of the GDP — which is in sharp contrast to the World Health Organization recommendation that countries spend 4-5 per cent of their GDP to achieve robust healthcare. The Centre has stated that it intends to increase healthcare spending to 3 per cent of the GDP by 2022, but if one were to take the developments of the last 10 months, even a 100% increase would still be the bare minimum requirement.

On the upside, the pandemic allowed India to showcase its prowess in manufacturing vaccines that will significantly benefit not just the country but also a host of nations who have committed to buy our indigenously-made vaccines. A significant budgetary allocation along with policy moves to ease manufacturing, production and exports will help offset the projected contraction in the economy to some extent, and also provide an opportunity for the private sector and government to work in tandem to give the healthcare sector a much-needed leg-up. At a time when the world has been ravaged by a virus of extraordinary proportions, a strategic allocation in healthcare should be given the highest priority.