New Delhi:

More tax benefits for health insurance under the new tax regime, relaxation in payment norms for MSMEs and incentives for the agri-tech sector are among the stakeholders’ expectations from the first budget of the Modi 3.0 government.

Finance Minister Nirmala Sitharaman is scheduled to present the full Budget for fiscal 2024-25 on July 23, which will be the first major policy document of the new government.

Anup Rau, Managing Director and Chief Executive Officer of Future Generali India Insurance Company said the deduction limit on health insurance premiums under Section 80D of the Income Tax Act has remained unchanged for the past nine years even though there has been a significant rise in healthcare costs across the country.

“It would be best if the limit for medical insurance is linked to inflation and gets revised automatically every year or once in a couple of years. Also, the benefits need to be extended to the New Tax regime since increasing health insurance penetration is critical. So, we hope the upcoming Budget to announce some hike in the deduction limit on health insurance premiums,” Rau said.

Tapan Singhel, MD & CEO of Bajaj Allianz General Insurance, said reforms like offering health insurance to employees at negotiated rates, reducing GST on health insurance premiums, and offering tax benefits like increased Section 80D exemption limits would make health insurance more affordable and accessible, especially for the ‘missing middle’ segment of our population.

“Additionally, for senior citizens, removing the limit on deductions for health insurance premiums would significantly ease their financial burden,” Singhel said.

The finance minister is likely to lay out the government’s economic agenda in the budget.

On expectations from Nirmala Sitharaman’s budget, D S Negi, CEO of Rajiv Gandhi Cancer Institute & Research Centre (RGCIRC), said the focus on reforming cancer care in India is crucial and it is important to prioritise funding for advanced treatments like immunotherapy and personalised medicine, ensuring more patients can access these cutting-edge therapies.

“Extending Ayushman Bharat to those aged above 70 years will be highly beneficial for senior citizens. However, the current coverage limit of Rs 5 lakh may not be sufficient for critical illnesses such as cancer, where treatment costs can range from Rs 15-20 lakh.

“Therefore, it is essential to consider increasing the coverage limit for critical illnesses like cancer to ensure adequate financial support for cancer patients,” Negi added.

The budget is likely to include steps to fast-rack reforms to make India a USD 5-trillion economy in the near future and turn the country into a ‘Viksit Bharat’ by 2047.

Ahead of the budget, Chairman of the Medical Technology Association of India (MTaI) Pavan Choudary said that customs duties and taxes levied on medical devices in India are one of the highest in the world which directly impacts patient affordability.

“On the other hand, countries like Singapore, Hong Kong, Italy, and Norway impose no such duties. Australia and Japan levy only a minimal 0.5 per cent duty, while in the United States, it stands at 2 per cent, and in China at 3 per cent.

“This stark contrast creates risk for illegal imports of medical devices in India that are not backed by legal and service guarantees. Furthermore, such trade would undercut the Indian government’s tariff revenue,” he said.

Vivek Jalan, Partner at Tax Connect Advisory Services LLP, said as per recommendations of Micro, Small & Medium Enterprises (MSMEs), Section 43B(h) in the Income Tax Act was introduced from AY 24-25. However, the alignment of the disallowance for payables under sections 43B(h) of the Act has been made with the MSME Act, which requires that payment has to be made to an SME within a maximum of 45 days.

“This is difficult in the present-day trade where a 60-90 days credit period is the norm.

“In this budget, it is expected that this provision will be relaxed/amended aligning the same with the CGST Act w.r.t. disallowance when payment to SMEs is not made within 180 days. Hence, in case a taxpayer does not pay an SME within 180 days, then the expense may be added back to his income,” he said.

In anticipation of the budget, Saurabh Rai, CEO of Arahas, has expressed high expectations for substantial investments in sustainability and geospatial technology.

“We anticipate significant allocations towards renewable energy projects and incentives for companies embracing green technologies,” he said.

Additionally, Rai said that boosting agri-tech innovations, providing tax incentives for tech companies and investing in human capital development is imperative for driving sustainable growth.

Sanjay Kumar, Founder and CEO of Geospatial World, said that to fully leverage the power of digital twin technology, it is crucial to allocate dedicated funds to it in the Union Budget.

“This allocation will facilitate the widespread adoption of digital twins, driving efficiency gains, cost savings, and improved decision-making in infrastructure projects. By investing in this technology, India can achieve significant long-term benefits, such as enhanced asset management, reduced downtime, and increased resilience to environmental challenges,” Kumar said.

Ms Sitharaman was given charge of the finance portfolio in the second stint of the Modi government after the 2019 general elections, becoming the first full-time woman finance minister in independent India.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

Union Finance Minister Nirmala Sitharaman holding a folder-case containing the Interim Budget 2024.
| Photo Credit: SHIV KUMAR PUSHPAKAR

A ‘robot tax’ to cross-subsidise employees who lose jobs because of the adoption of Artificial Intelligence (AI) by their employers is a key item on the budget wishlist of the Swadeshi Jagran Manch (SJM), which is affiliated with the Rashtriya Swayamsevak Sangh (RSS).

In a pre-Budget meeting of economists with Finance Minister Nirmala Sitharaman last month, the SJM also suggested that tax incentives be given to industries generating more employment, based on an employment-output ratio.

Fund to upskill workers

Ashwani Mahajan, economist and national co-convenor of the SJM, who attended the June 20 meeting told The Hindu that economic measures were needed to cope with the human cost of AI. “We are not against the adoption of cutting-edge technology including AI, but it is a fact that in the short run, this will lead to loss of employment among certain sections of employees, and a ‘robot tax’, as it’s being termed, can be used for creating a fund that would help these workers upskill and adapt to new technologies,” he said, adding that such a tax is under consideration in several other countries as AI-generated disruption is hitting most economies.

A paper released by the International Monetary Fund (IMF) in June also argues that the AI transition will require fiscal incentives and stronger social nets being put in place, for all economies. Last year, Prime Minister Narendra Modi had cautioned people about the perils of misinformation and fake news with regard to AI, but the question of people falling out of the job market and being replaced by robots is a real worry.

‘Incentivise job creation’

Apart from the ‘robot tax’, some concerns raised during the recent parliamentary poll campaign are also reflected in the SJM’s wishlist. With unemployment being a major theme during the campaign, the SJM has suggested that industries be incentivised to create more jobs through tax measures.

With regard to food inflation, SJM proposed that small farmers be given subsidies for micro irrigation projects that they can start on their lands to increase productivity. It also recommended that these micro irrigation projects be made eligible for funding via corporate social responsibility (CSR), by adding them to Schedule VII of the Companies Act, 2013.

Wealth tax

On the issue of housing for all, the SJM suggested that a wealth tax be imposed on those holding “vacant land”, in order to “discourage unneccessary land holding on the pretext of future requirements”.

Ms. Sitharaman and Prime Minister Narendra Modi have been speaking to a range of stakeholders and economists in the run-up to the presentation of the Union Budget, which is expected to take place on July 23. The Budget session of Parliament will begin on July 22 and is expected to end on August 12.

Prime Minister Narendra Modi addresses a meeting with economists ahead of the Union budget which will be presented on July 23, in New Delhi on July 11, 2024. Union Finance Minister Nirmala Sitharaman is also present.
| Photo Credit: ANI

Prime Minister Narendra Modi is meeting eminent economists on July 11 to elicit their views and suggestions for the upcoming Budget, a senior government official said.

Union Finance Minister Nirmala Sitharaman is scheduled to present the Budget for 2024-25 in the Lok Sabha on July 23.

Also Read | Union Budget should focus on fiscal prudence, tax restructuring, agriculture reforms: SBI Research

Besides economists and sectoral experts, Niti Aayog Vice Chairman Suman Bery and other members also attended the meeting.

Finance Minister Sitharaman, Planning Minister Rao Inderjit Singh, Chief Economic Advisor V. Anantha Nageswaran and economists Surjit Bhalla and Ashok Gulati and veteran banker K.V. Kamath among others were present in the meeting.

The Budget for 2024-25 will be the first major economic document of the Modi 3.0 government, which, among other things, is expected to lay the road map for making India a developed nation by 2047.

President Droupadi Murmu, in her address to the joint sitting of Parliament last month, had indicated that the government would come out with historic steps to accelerate the pace of reforms.

She also said the Budget will be an effective document of the government’s far-reaching policies and futuristic vision.

Ms. Sitharaman has already held discussions with various stakeholders, including economists and captains of Indian industry, on the forthcoming Budget.

Several experts have urged the government to provide tax relief to the common man to boost consumption and take steps to check inflation and accelerate economic growth.

The economy has recorded a growth rate of 8.2% in 2023-24.

Earlier in February, Ms. Sitharaman presented an interim budget for 2024-25 in view of the Lok Sabha elections.

India’s health system is at a crossroads as it needs to, without any further procrastination, build the capacity in all States, particularly the northern States, to cope with the dual burden of disease, writes former health secretary Sujatha Rao. Image for representation purposes only. File
| Photo Credit: Pixabay

A goal post that consistently shifts is the one related to increasing public health spending to the magical figure of 2.5% of GDP. Current total health spending is about 3.5%. Of this public health spending is about 1.35%. Low public spending implies high out of pocket expenditures by households.

Demonetization, GST and the COVID pandemic in quick succession have adversely impacted millions of households living at the margin with stagnant wages, high prices of food and borrowings, making ‘affordability’ of health care critical. While 13.4% of households in rural areas and 8.5% in urban areas have borrowed money to pay their medical bills, the rest have either sought access to free public care, denied themselves health care or availed substandard care that is within their budget. An estimated 60-80 million households are reported to have fallen below the poverty line for availing medical care. What is certainly a paradox of Indian politics is that despite all this, health is a non issue for electing governments.

India’s health system is at a crossroads as it needs to, without any further procrastination, build the capacity in all States, particularly the northern States, to cope with the dual burden of disease. Communicable and infectious diseases are easier to handle in terms of the episodic nature of the disease, though, if neglected, the consequences can be devastating and brutal. Non-communicable diseases on the other hand have to be managed over a lifetime necessitating a steady, routinised, system of care. Tackling both requires a health system that is swift and nimble but also steady and solid. Getting the right balance is the key: the right mix of skills and competencies, technology, infrastructure and supervisory systems. All this needs money.

While most countries have brought in reforms and revamped their delivery systems to make them fit for purpose, India has wasted much time, in constantly hemming its budgets at the edges and resorting to knee-jerk responses to every health crisis, such as increasing the sum assured – ₹5 lakh to ₹10 lakh to ₹15 lakh and so on – under subsidised social health insurance. The increases in sums assured are just meaningless and most lazy of all ways of setting right a deeply flawed system of care.

With the budget time around the corner, there are huge expectations, despite the past being so uninspiring. Since 2010, India’s public spending, in proportion to the GDP, has hovered around 1.12% to 1.35%. In gross terms, though central budget allocations have certainly improved – up from ₹25,133 crore in 2012-13 to ₹86,175 crore in 23-24, the proportion to GDP of the central health budget has been around 0.27%. With States averaging a 5% spending of their revenue budgets against the targeted 8%, overall public health spending is not just low but disproportionately low in the poorer States like Bihar.

While overall allocations have been disappointing, a real positive is the loan of $65 million from the World Bank and $175 million from the ADB that has recently been negotiated. Under this the focus is, and rightly, on strengthening the district-level disease surveillance laboratory infrastructure, establishing ICUs in large districts, strengthening primary health care facilities and so on. While these loans will fill the glaring gaps in our health system as thrown up during the COVID pandemic, India, however, cannot stop and needs to invest hugely and quickly in building the basic health infrastructure in the country, particularly in the States of Bihar, U.P., MP, Orissa, Rajasthan, Chattisgarh, Jharkhand and Assam where shortfall of both facilities as well as human resources is far above the national average of 30%. This disparity needs to be bridged with a dramatically differential package of funding from the Central Government. Till the supply position improves, demand-side interventions like Ayushman Bharat (PMJAY) are of marginal value, more so, with out-patient care not being insured. Systems in these States must be developed and the Finance Ministry must make a beginning with not only substantially increasing health budgets, particularly for NHM, but in addition, allocate all the money collected under the 4% health cess to the health budget. Of the total of ₹69,063 crore collected so far, only 25% of it has been transferred to the Health Ministry.

In addition to strengthening the public health systems, there is a need to rationalise the GST levies on health products, such as 18% GST on health insurance premiums or 5% GST on insulin and hepatitis diagnostics when the number of diabetics and those prone to hepatitis are increasing. Disincentives also need to be considered for those private entities that are increasing the cost of care despite full GST exemptions and a huge number of other sops being extended from time to time.

The bottom line regarding the health sector, however, is all about the role of the State, the rights of a tax-paying citizenry and the development model proposed. Is health a public good? Is healthy well-being a foundational prerequisite for human development? Is health a part of the social contract that citizens have with the State when they pay taxes? Is there a societal obligation to help those who are sick and ill? If the answer is in the affirmative, then it is time for the government to double the health budget alongside launching a reform agenda to set right a dysfunctional system. This takes time, needs political consensus and not be disrupted or buffeted about on account of an unstable political environment. Other countries have shown the way. India needs to now follow their path to lend credibility to the aspiration of being a developed country by 2047.

[Kannuru Sujatha Rao is India’s former Health Secretary; She was Director General National Aids Control Organisation before that. She is also the author of a 2017 book – India’s Health System: Do we care?]

India’s health system is at a crossroads as it needs to, without any further procrastination, build the capacity in all States, particularly in the northern States, to cope with the burden of disease. Image for representation purposes only. File photo: Pixabay

A goal post that consistently shifts is the one related to increasing public health spending to the magical figure of 2.5% of GDP. Current total health spending is about 3.5%. Of this public health spending is about 1.35%. Low public spending implies high out of pocket expenditures by households.

Demonetization, GST and the COVID pandemic in quick succession have adversely impacted millions of households living at the margin with stagnant wages, high prices of food and borrowings, making ‘affordability’ of health care critical. While 13.4% of households in rural areas and 8.5% in urban areas have borrowed money to pay their medical bills, the rest have either sought access to free public care, denied themselves health care or availed substandard care that is within their budget. An estimated 60-80 million households are reported to have fallen below the poverty line for availing medical care. What is certainly a paradox of Indian politics is that despite all this, health is a non issue for electing governments.

India’s health system is at a crossroads as it needs to, without any further procrastination, build the capacity in all States, particularly the northern States, to cope with the dual burden of disease. Communicable and infectious diseases are easier to handle in terms of the episodic nature of the disease, though, if neglected, the consequences can be devastating and brutal. Non-communicable diseases on the other hand have to be managed over a lifetime necessitating a steady, routinised, system of care. Tackling both requires a health system that is swift and nimble but also steady and solid. Getting the right balance is the key: the right mix of skills and competencies, technology, infrastructure and supervisory systems. All this needs money.

While most countries have brought in reforms and revamped their delivery systems to make them fit for purpose, India has wasted much time, in constantly hemming its budgets at the edges and resorting to knee-jerk responses to every health crisis, such as increasing the sum assured – ₹5 lakh to ₹10 lakh to ₹15 lakh and so on – under subsidised social health insurance. The increases in sums assured are just meaningless and most lazy of all ways of setting right a deeply flawed system of care.

With the budget time around the corner, there are huge expectations, despite the past being so uninspiring. Since 2010, India’s public spending, in proportion to the GDP, has hovered around 1.12% to 1.35%. In gross terms, though central budget allocations have certainly improved – up from ₹25,133 crore in 2012-13 to ₹86,175 crore in 23-24, the proportion to GDP of the central health budget has been around 0.27%. With States averaging a 5% spending of their revenue budgets against the targeted 8%, overall public health spending is not just low but disproportionately low in the poorer States like Bihar.

While overall allocations have been disappointing, a real positive is the loan of $65 million from the World Bank and $175 million from the ADB that has recently been negotiated. Under this the focus is, and rightly, on strengthening the district-level disease surveillance laboratory infrastructure, establishing ICUs in large districts, strengthening primary health care facilities and so on. While these loans will fill the glaring gaps in our health system as thrown up during the COVID pandemic, India, however, cannot stop and needs to invest hugely and quickly in building the basic health infrastructure in the country, particularly in the States of Bihar, U.P., MP, Orissa, Rajasthan, Chattisgarh, Jharkhand and Assam where shortfall of both facilities as well as human resources is far above the national average of 30%. This disparity needs to be bridged with a dramatically differential package of funding from the Central Government. Till the supply position improves, demand-side interventions like Ayushman Bharat (PMJAY) are of marginal value, more so, with out-patient care not being insured. Systems in these States must be developed and the Finance Ministry must make a beginning with not only substantially increasing health budgets, particularly for NHM, but in addition, allocate all the money collected under the 4% health cess to the health budget. Of the total of ₹69,063 crore collected so far, only 25% of it has been transferred to the Health Ministry.

In addition to strengthening the public health systems, there is a need to rationalise the GST levies on health products, such as 18% GST on health insurance premiums or 5% GST on insulin and hepatitis diagnostics when the number of diabetics and those prone to hepatitis are increasing. Disincentives also need to be considered for those private entities that are increasing the cost of care despite full GST exemptions and a huge number of other sops being extended from time to time.

The bottom line regarding the health sector, however, is all about the role of the State, the rights of a tax-paying citizenry and the development model proposed. Is health a public good? Is healthy well-being a foundational prerequisite for human development? Is health a part of the social contract that citizens have with the State when they pay taxes? Is there a societal obligation to help those who are sick and ill? If the answer is in the affirmative, then it is time for the government to double the health budget alongside launching a reform agenda to set right a dysfunctional system. This takes time, needs political consensus and not be disrupted or buffeted about on account of an unstable political environment. Other countries have shown the way. India needs to now follow their path to lend credibility to the aspiration of being a developed country by 2047.

[K. Sujatha Rao is India’s former Health Secretary; She was Director General National Aids Control Organisation before that. She is also the author of a 2017 book – India’s Health System: Do we care?]