Union Budget May See Separate Fund for Health Sector After Covid-19 Impact: Report

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As part of the Union Budget 2021, the Centre is planning to strengthen the health infrastructure.

Sources have informed CNBC-TV18 that in this regard the government may create a special separate fund for health sector, which may be called the Pradhan Mantri Swastha Samwardhan Nidhi. An initial proposal has been drafted by the Ministry of Health and Finance Minister Nirmala Sitharaman is likely to announce this in the upcoming Budget on February 1, added the sources.

According to the proposal, the Pradhan Mantri Swastha Samwardhan Nidhi will be a non-lapsable fund in the Public Account. It means the amount kept in this fund will not lapse at the end of the financial year. Proceeds from the health and education cess will be kept in this proposed fund. Currently, the government levies 4% education and health cess on income and corporate tax. Out of which a 3% cess is on the name of education and the rest 1% for health. So, 25% of the total collection from education and health cess will be kept in this proposed Fund.

In financial year 2019-20, the total proceeds from health and education cess was around Rs 56,000 crore of which the health cess was around Rs 14,000 crore.

These funds will be utilised for the flagship scheme of health sector like Ayushman Bharat, Health and Wellness Centres, Pradhan Mantri Swasthya Suraksha Yojna, etc.

As per the proposal, initially the expenditure on any of the above schemes will be incurred from the gross budgetary support (GBS). Once the GBS is exhausted, the proposed fund will be utilised. Sources said a major benefit of this fund will be the availability of additional resources for universal and affordable health care. The ultimate goal is to increase the spending in health sector to 4% of GDP by 2024 from the current 1.4%.