The leading rating agency ICRA Ltd has called the health and pharmaceutical related announcements that came with the Union Budget 2006-07 'marginally positive.' The post-budget analysis of ICRA states that the budget recognises the importance of healthcare services sector in context of the domestic economy and growth. The decline in the customs duty on bulk intermediates and chemicals (following the decline in peak rate of duty) may lead to marginally lower raw material costs, according to the agency.

ICRA feels that the customs duty reduction may marginally benefit the pure formulations players as the cost of inputs is likely to decline. Reduction in the customs duty coupled with nil countervailing duty on select anti-cancer, anti-AIDS and life saving drugs and their formulations may result in cost effective medication for the end user.

ICRA lauded the special emphasis given to improve equity and universal accessibility of the quality basic health care to the community at large.

"Pooling and expansion of all the water and sanitation programmes under one umbrella would enable to concentrate the efforts towards delivery of safe drinking water for all, taking major step towards controlling the water borne disease, which constitute a major bulk of the communicable diseases," ICRA stated.

The agency felt that the augmentation of Health Insurance Scheme to all below the poverty line in the last fiscal year will continue to pool risk and improve accessibility to quality care. However, it cautioned that the increase in the service tax for the life insurance products may reduce the insured base to a certain extent amongst the out of pocket payers in the middle and lower middle class population.

"The customs and excise duty benefits are likely to see the emergence of private players widening their horizons to deliver chronic care and palliative care services, which currently remains under served. Special emphasis on the curative services for HIV, AIDS and cancer has been rightly timed to address the growing concern in these two areas," it noted.

The negative effect was pointed out to be the withdrawal of exemption for taxable services provided by a Medical Transcription Centre. According to ICRA, this is likely to have a marginally negative impact on the growth of domestic medical transcription industry.