Budget 2012: Positive effect on expanding healthcare sector

Budget Provisions:

• The new hospital with at least hundred beds was earlier eligible for the 100 per cent deduction for capital expenditure.  This deduction has been stepped up to 150 per cent of the capital expenditure. However, this amendment will be effective from 01st April 2013.

• At present a deduction is allowed in respect of premium paid towards a health insurance policy for insurance of self, spouse and dependant children or any contribution made to the Central Government Health Scheme up to a maximum of Rs 15000 in aggregate. Interestingly, a further deduction of Rs 15000 is also allowed for buying a health insurance policy in respect of parents. This also includes any payment made by an assesse on account of preventive health check-up of self, spouse, dependant children or parents not exceeding in the aggregate of Rs 5000.

• Notably, The Government increased funds allocation for National Rural health Mission (NRHM) by 15 per cent to Rs 20822 crore.

• Also, The Government is modernizing the existing units and setting up a new integrated vaccine near Chennai and plan to achieve vaccine security and keep the pressure on disease eradication and prevention.

• The concessional rate of 5 per cent of basic customs duty is being extended to six life savings drugs/vaccines and their bulk drugs used in the manufacture of said drugs. Also, excise duty is fully exempted on these. These are used for the treatment or prevention of ailments such as HIV-AIDS, renal cancer etc.

• The Excise duty is being reduced to Nil on specified raw materials Viz stainless steel tube and wire, cobalt chromium tube, Hayness Alloy-25 and polypropylene mesh required for manufacture of Coronary stents/ Coronary stent system and artificial heart valve on actual user basis.

• Also, The Excise duty is being reduced to 6 per cent on specified raw materials viz polypropylene, Stainless Steel Strip and stainless steel capillary tube for manufacture of syringe, needle, catheters and cannulae on actual

user basis.

• The full exemption from basic custom duty, CVD (Countervailing Duty) and SAD (Special Additional Duty) is being provided to specified raw materials viz stainless steel tube and wire, cobalt chromium tube, Hayness Alloy-25 and polypropylene mesh required for manufacture of Coronary stents/ coronary stent system and artificial heart valve on actual user basis.

• The basic customs duty is being reduced to 2.5 per cent along with 6 per cent CVD and Nil SAD on specified raw materials viz polypropylene, Stainless Steel Strip and Stainless Steel capillary tube for manufacture of syringe, needle, catheters and cannulae on actual user basis.

Industry Expectations:

• Infrastructure status should be granted to healthcare industry and tax holiday benefit provided accordingly: Not fulfilled

• Public Private Partnership should be encouraged in Healthcare: Not fulfilled

Budget Impact:

The increase in investment-linked deduction to 150 per cent (previously 100 per cent) on at least hundred-bed hospital is the key positive. The provision of NIL excise duty and exemption of customs duty on raw materials required for manufacture of Coronary stents/ Coronary stent system will led to available of these stents to cardiac patients at cheaper rates. Also, the reduction of excise duty and customs duty on specified raw materials for manufacture of syringe, needle, catheters and cannulae makes them available at cheaper rates for the patients.

Outlook:

The Union budget 2012-13 provided some respite to the Healthcare industry. The increase in the investment linked deduction to 150 per cent for the at least hundred bed hospitals, inclusion of up to Rs 5000 as preventive health check-ups for the increase in deduction allowed to the health insurance were the key positives. Also, the Nil/reduction in Excise duty and Customs duty of the raw materials used for the cardiac stents and syringe, needle, catheters, cannulae will definitely relief the patients. However, the grant of infrastructure status not fulfilled. Overall the budget is positive for the sector.