India has been claiming to be an ideal destination for medical tourism and super-speciality healthcare for some years attracting several thousands of foreign nationals for treatment in India. This may continue for years to come as the cost of treatment is rather cheaper for them here in comparison to western countries and Gulf. But the government of India has failed to provide even basic healthcare to its own people after sixty years of independence. When compared to the developed and many developing countries, the share of public expenditure in the country’s total expenditure on healthcare is very low and it is lower than other Asian countries like China, Malaysia, Sri Lanka, Thailand and Bangladesh. India ranks sixth from the bottom, amongst all countries in the world, in terms of public expenditure on healthcare as a proportion of the Gross Domestic Product. Continued failure in the health outcomes of a majority of the country’s population is rooted in the poor state of public provisioning for healthcare. Public expenditure accounts for only a small fraction of total expenditure on healthcare in India, which reflects the low priority given to health sector in the government budgets of the country. This is somewhat clear with the presentation of the Union Budget for 2012-13. There is no significant allocation for health sector despite the pledge to double the spending on this sector. As a proportion of the GDP, the Centre’s expenditure on health, which was stagnant over the past few years, has risen marginally for 2012-13. Total health expenditure from the Centre, as a share of total Union Budget, stands raised to 2.31 per cent for 2012-13 from 2.15 per cent in 2011-12. This is too small a funding considering the huge unmet medical needs of the poor class. The fund allocation for the National Rural Health Mission (NRHM) raised to Rs 20,822 crore in 2012-13 from Rs 18,115 crore in the previous year. Considering the huge infrastructure gap in this flagship social sector programme of the Central government, this increase is extremely inadequate. The only new initiative of the government in the health front is a proposal to launch the National Urban Health Mission. The new scheme is yet to get any funds even though framework for its implementation was drawn up in mid-2010. In short, this year’s Union Budget has very little to offer to healthcare sector. The pharmaceutical industry has been almost overlooked by the finance minister with no major incentives for its growth. The Budget has given some nominal reductions in excise and custom duties on certain life saving drugs. The sole consolation for the pharma sector is the extension of weighted deduction of 200 per cent for R&D expenditure in an in-house facility beyond March 31, 2012 for a further period of five years. The proposal to set up a new integrated vaccine project near Chennai is another proposal if implemented can bring about vaccine security in the country and keep up the pressure on disease eradication and prevention. And the 2 per cent excise duty hike across the board has turned out to be a big disappointment to the pharmaceutical sector as is the case with all other industry segments.