Jan 2020 | News |

At a time when the country’s economy is hit by the worst slowdown in over a decade, what the budget holds for various sectors becomes all the more important, especially because consumption across most sectors has taken a hit. Eleven days before finance minister Nirmala Sitharaman presents Budget 2020, Mint spoke with the C-suite from three key sectors—healthcare, travel and tourism, and financial services—to understand what they expect from it.



The budget can make a lot of difference to the healthcare sector and the affordability of health insurance in India, according to Dr Devi Prasad Shetty, chairman and executive director of Narayana Health.
Shetty expects the FM to not only address the broader issues ailing the sector, but also wants the budget to look closely at the health insurance situation in the country. “Today, health insurance premiums run into lakhs of rupees, which makes it unaffordable for a larger section of the population (to get treatment). The government needs to look at bringing in regulations that can make health insurance affordable for all,” he said.


For this, the surgeon has pinned his hopes on the government’s Ayushman Bharat scheme, saying the programme has the ability to transform the healthcare landscape in India. However, he added that it may require constant modifications in terms of costs and coverage. “The government needs to work on making the scheme financially viable,” he said.


Among the broader things that Shetty wants addressed is shortage of medical specialists and the price control on medicines. “If we had adequate medical experts, we’d have transformed healthcare not only in India but globally as well,” said Shetty. The doctor said it was due to this shortage that medical education was so expensive in India. Shetty said there’s constant pressure from the government to open hospitals in tier-II and tier-III cities but this isn’t possible unless there are enough number of doctors.


Once health insurance comes within the reach of the masses, the government may have room to address the issue of price controls. Once price controls are eased, more companies can enter the market and invest in research and development, and produce life-saving drugs, said Shetty.


Travel and tourism

Other sectors want a consumption push from the budget. According to data by MoneyTap, a fintech lending company, people are increasingly borrowing to meet necessary expenditure such as payment of bills and rent deposits. Since people are borrowing for even necessities, discretionary expenses would have taken a hit. That appears to be true for one of the major discretionary expenses: travel.
The grim economic situation has hit the tourism industry, said Aloke Bajpai, co-founder and CEO, Ixigo, a travel and hotel booking website. Ixigo, which has a user base of over 100 million travellers, is witnessing the impact, he added.


Incidents like the Jet Airways’s collapse led to a hike in airfares, which perhaps further discouraged travellers reeling under the slowdown. “The drop in capacity took six months to get back to normal and business did take a hit, perhaps because fares went up,” said Bajpai.
The winter travel business (October-December) is usually higher than the earnings in the summer holiday season. In 2019, the winter business fell to the summer levels, said Bajpai. “The independent business travel segment is showing signs of weak economic condition. People are either travelling less or opting for a lower cabin class,” added Bajpai.


At the macro level, Bajpai said the government needs to look at improving infrastructure, including at pilgrimage sites. Connectivity of tourism sites is another area that needs some work. “Airports closer to tourism sites and tier-II and tier-III cities will encourage travellers as it will also lower the cost of travel,” said Bajpai.


“It’s also important to create an environment where entrepreneurs can come up with more experiences and supplement the existing tourism in the country.”


To boost consumption, the government should look at creating jobs in the upcoming service sectors as the high unemployment rate is a huge problem, said Bajpai.


Financial services

Sathya Kalyanasundaram, country head and MD, Experian India, said that there’s a large population that feels that it is bearing too much of the tax burden. This can be resolved by widening the tax base and simplifying the proposed Direct Tax Code (DTC). The government tabled a proposal for the simplification of DTC in October 2019. “Widening the tax base offers the opportunity to collect taxes from a larger pool of taxpayers, and also drives consistency in tax collection. Examples include widening of the tax slabs, removal of surcharges, and providing greater simplicity in deduction to lower income tax payers. This offers the ability to encourage a larger pool of personnel to contribute to the tax base,” said Kalyanasundaram.


There is a larger push towards compliance, which is causing short-term stress, he said. “In banking, for example, there is better governance and process on how loans are being sanctioned and how assets are classified as NPAs,” said Kalyanasundaram. The shift from a relationship-based approach to a risk-based one has affected the ability of banks to lend, he said. “While demand for credit continues to grow, the supply has slowed due to market conditions and sentiment. Long-term sentiment needs to be improved through measures that will seek to clarify that there is sufficient growth to participate in so that the tightening of credit supply can be relooked at,” added Kalyanasundaram.


Financial inclusion and financial literacy need to be in sync. “Consumption pattern hasn’t caught up though there are more bank accounts and higher access to credit. This means the concept is good but last mile execution needs improvement,” he said.


Employment generation, consumption push, affordability of healthcare and greater focus on financial literacy are some of the top demands. Will the Budget 2020 factor in these?