Union Finance Minister Pranab Mukherjee stuck to his determined path towards rationalisation and reforms by giving a boost to the health sector, but in measured terms, and overlooking the pharmaceutical sector that was waiting for some major impetus.

A hike in health allocation, full exemption from excise duty to six specified six life-saving drugs, extension of weighted deduction on research and development for five years on the positive side, and two per cent increase in the excise duty on the negative side were the highlights for the pharma and health sectors in the budget presented in the Parliament on Friday.

“It is proposed to extend concessional basic customs duty of 5 per cent with full exemption from excise duty/CVD to six specified life-saving drugs/ vaccines. These are used for the treatment or prevention of ailments such as HIV-AIDS, renal cancer, etc. Protein deficiency among women and children is one of the most common sources of malnutrition in India. I propose to reduce basic customs duty on Soya protein concentrate and isolated soya protein from 30 per cent or 15 per cent respectively to 10 per cent. Simultaneously, excise duty on all processed soya food products is being reduced to the merit rate of 6 per cent,” the Minister said.

“Consumption of iodised salt prevents iodine deficiency and related diseases. I propose to provide a concessional basic customs duty of 2.5 per cent along with reduced excise duty of 6 per cent on iodine. Probiotics are a cost-effective means of combating bacterial infections. It is proposed to reduce the basic customs duty on this item from 10 per cent to 5 per cent,” he said.

“They say persistence pays. I am happy to inform Members that no new case of polio was reported in the last one year. By modernising existing units and setting up a new integrated vaccine unit near Chennai, the Government will achieve vaccine security and keep the pressure on disease eradication and prevention. National Rural Health Mission (NRHM) is being implemented through ‘Accredited Social Health Activist’- ‘ASHA’. The scope of ASHA’s activities is being enlarged to include prevention of Iodine Deficiency Disorders, ensure 100 per cent immunisation and better spacing of children. At the community level, a more active role is envisaged for ASHA as the convenor of the Village Health and Sanitation Committee, as also to support the initiative on malnutrition. Since ASHAs receive activity-wise, performance-based payments, this will also enhance their remuneration. I propose to increase the allocation to NRHM from Rs.18,115 crore in 2011-12 to Rs.20,822 crore in 2012-13,” he said.

“National Urban Health Mission is being launched to encompass the primary healthcare needs of people in the urban areas. The Pradhan Mantri Swasthya Suraksha Yojana (PMSSY) aimed at setting up of AIIMS-like institutions and upgradation of existing Government medical colleges is being expanded to cover upgradation of 7 more Government medical colleges. It will enhance the availability of affordable tertiary health care,” the speech said.

While investment linked deduction of capital expenditure incurred in hospitals will be provided at the enhanced rate of 150 per cent, as against the current rate of 100 per cent, the healthcare sector also got another relief from the Government as it would be in the negative list in the case of service tax.

In what can be the sole consolation for the pharma sector, the minister has extended 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.

Some concessions, being offered to the micro, small and medium enterprises may also prove handy for the SME pharma units. A Rs.5,000 crore India Opportunities Venture Fund with SIDBI, two SME exchanges, and public procurement policy for SMEs by ministers and CPSEs may also do good for the sector. However, the biggest worry came in the form of a hike in the excise duty slabs.