Budget 2022: When is Healthcare’s Amrit Kaal Coming?

Budget 2022


On 1 February 2022, our Hon. Finance Minister presented her fourth budget in the Parliament and introduced the “Amrit Kaal” in Point 4 of her speech, “we are marking Azadi ka Amrit Mahotsav, and have entered into Amrit Kaal, the 25-year-long leadup to India@100. Hon’ble Prime Minister in his Independence Day address had set-out the vision for India@100.”

Point 5 of the Budget Speech outlined the vision for Amrit Kaal, “By achieving certain goals during the Amrit Kaal, the government aims to attain the vision. They are:

  • Complementing the macro-economic level growth focus with a micro-economic level all-inclusive welfare focus,
  • Promoting digital economy & fintech, technology enabled development, energy transition, and climate action, and
  • Relying on virtuous cycle starting from private investment with public capital investment helping to crowd-in private investment.

The Finance Minister has envisioned to develop ‘sunrise opportunities’ such as artificial intelligence, genomics, and pharmaceuticals to assist sustainable development and modernise the country. However, this is more on the supply side industrial development. But the core issue of healthcare infrastructure is not addressed. Envisioning the Indian population which we would like to be a healthy one by 2047 when we enter India@100. I believe that Budget 2022 missed out a huge opportunity in envisioning Healthcare 2047! Here are my reasons.

Current Undergoing Transformation in Healthcare

The country has undergone a tough time during the pandemic. The Government has played its enabling role in ensuring the supply chain disruptions with China does not lead into a health crisis of sorts. On the other hand, the funding of Covid-Vaccine and immunization has ensured that the country emerges quickly into an endemic phase of Covid pandemic. While this was going on, there was strengthening and upgrade of the digital health infrastructure. The pandemic has also taught lessons to the private healthcare delivery ecosystem to restructure their business models and ensure that there is a push toward lower costs healthcare delivery models. These transformations have demonstrated India’s resilience in its healthcare systems to face emergency situations like the current pandemic.  

India’s Amrit Kaal’s Population Demographics

As the chart below demonstrates that India’s population by 2047 will be shifting towards middle age bulge. Over 300 million (~19% of the total population) will be senior citizens by 2047. Our dependency ratio will be around 40%. These 40% will be in the tax paying bracket which will provide the then Finance Minister in 2047 the revenues to spend for different welfare programs including healthcare.

India's Population Pyramid Shifts to 2047
India’s Population Pyramid Shifts to 2047

Lessons from Elsewhere in the World

In early 2000, I was involved in restructuring the healthcare systems of Saudi Aramco. Being the largest oil producer in the world, the company had been underfunding the pension and healthcare benefits of their employees who were going to be retiring in the future. The financing of these healthcare benefits created a financial crisis of sorts which have to be funded.

USA has also being facing such challenges when its baby boomers have now become unproductive senior citizens and their total healthcare bill is currently 18% of their GDP.

Vision for India’s Amrit Kaal Healthcare Delivery to Avoid Maha Kaal

As per current estimates, our country requires USD 400 billion of investments in healthcare infrastructure on our current demography to meet the global norms. There are no allocation in the current National Infrastructure Pipeline (NIP) funding for healthcare. Therefore much of the investment will be private sector driven in the future for healthcare infrastructure.

Such experiences elsewhere in the world remind me that our Amrit Kaal in 2047 does not end up as Maha Kaal of our Amrit Kaal where we would have to look up to Indian Gods who were invoked to end the situation. There have been several demands in the last few budget to accord infrastructure status to the healthcare industry. The current budgetary allocations to healthcare all though increasing has not been sufficient to build capital formation for healthcare infrastructure in the country. From the current 2.5% of GDP, there needs to broaden the spend on healthcare. We need the real picture of the input and outputs in healthcare. With the current GST regime of zero tax on healthcare services, we are not able to gather the real value of healthcare in the country and healthcare should be under minimum GST slab so that there is pass through benefits of the inputs that are set off. This will lead to a lot of transparency and provide real hard estimates of healthcare spend of the country.

Assuming by 2047 our dependency ratio will be lower than today. Which means that the total taxpaying population in 2047 may be same as today or even lower. There needs to be a plan to ensure that current taxes from the current population who will become senior citizens by 2047 will be underfunded like in the examples that I have mentioned below, leading into a budgetary crisis.

In all earnest, given the current constraints the current budget 2022 could do so much for healthcare. But now that the Amrit Kaal is out of the bag, there needs adequate focus to healthcare to avoid healthcare Maha Kaal in 2047 when we enter India@100.

Healthcare and Life Sciences in 2021: Part 2 – State Investments Heat Map

In Part 1 of the Healthcare and Life Sector in 2021, we focused on the heat map on different sub-sectors. 2021 Investment Heat Map | Kapil Khandelwal (KK), we predicted the investment activity for 2021. In Part 2, we focus for the first time State-wise investment Heat Map under Part 2, Hottest States to Invest for Healthcare and Life Sciences. These have been aggregated into our overall Heat Map in Part 1. In India’s federal structure of governance, healthcare is a State subject while some of the other parts of the healthcare and lifesciences value chain are Centre subject. Hence it is very difficult to isolate the impact of governance model on the overall investment activity. Also some States and Union Territories were demerged and hence historical data may be merged with erstwhile states from where the new States demerged.

The meta data from different states and social media feeds have been incorporated to produce India’s first state-wise heat map.

We have taken the following parameters on which we assessed all the States and Union Territories of India

  • Provisioning For Covid   
  • Promoting Start Up Ecosystem    
  • Participation of Value Chain      
  • Policies and Regulations
  • Population Dependency
  • Penetration of Insurance
  • Preventative Health and Wellness           
  • Penetration of Digital Health     
  • Population Epidemiological Burden           
  • Population Access to Beds Per Km           
  • Point of Care Access to Doctors 
  • Point of Care Access to Other Clinicians           
  • Healthcare Pricing Competitiveness           
  • Healthcare Disparity

States Heatmap 2
2021 State-wise Healthcare and Life Sciences Investment Heatmap

Hottest Investment Destinations for 2021

  • Andhra Pradesh/Telangana
  • Karnataka
  • Gujarat
  • Tamil Nadu

Emerging Investment Destinations for 2021

  • Kerala
  • Madhya Pradesh
  • Rajasthan
  • Uttar Pradesh
  • Maharashtra

Hottest Union Territories Destination for 2021

  • Delhi NCR
  • Chandigarh
  • Daman/Diu

Stay Safe and Happy Investing in the rest of 2021!

Healthcare and Life Sciences in 2021: Part 1- Sectoral Investments Heat Map

2021 Healthcare and Lifesciences Investment Heatmap

Healthcare and Life Sciences in 2021: Part 1- Sectoral Investments Heat Map

Since 2013 our algos have been accurately predicting the investment heatmap in the healthcare and life sciences in India which were predicting with 95% accuracy on the sectoral investment cycle in India till the end of 2019. Covid Pandemic has completely disrupted and reset the investment cycle in India and we missed out all our prediction accuracy for 2020. We were at cross roads for releasing our Heat Map for 2021. The first was to actually abandon the whole exercise of predicting. The second was to actually relook at India and the world afresh and rebuild out algos and work with lower levels of prediction accuracy like we started back in 2013. We chose the later. While we worked on the Heat Map for 2021, we realized that there were additional variables that would impact investments in 2021 which we have added. These are Human Capital and New Normal Disruptions which would have an impact on how investments and investment activity in healthcare and life sciences in India will pan out in 2021. During 2020, while we were tracking the progress or containment of Covid to an endemic stage in India, we also realized that the execution of the Covid-related measures is in the hands of the States of India given that health is a State subject in our Federal governance structure and different States have demonstrated varying levels of outcomes in healthcare. My blog Sustainability of Digital Health | Kapil Khandelwal (KK) provides this insights. We have taken these into consideration to create for the first time State-wise investment Heat Map under Part 2, Hottest States to Invest for Healthcare and Life Sciences. These have been aggregated into our overall Heat Map here. Please await the release of our Part 2 shortly.

As part of our revised Heat Map for 2020 released in mid-2020, we had predicted a V-shaped recovery for healthcare and lifesciences. March 2020 was the all-time low for the markets and BSE Healthcare Index. By 31 December 2020, the index was at all-time high. With the rapid bounce back of the equity markets, the pricing and returns for healthcare and lifesciences is now not going to be sustainable in 2021, given low cost of debt in India, other supply side challenges, proactive regulations such as Telemedicine Act, National Digital Health Mission (NDHM), PLI Incentives, two leading Covid vaccine candidates.

Vaccine Race and Human Capital to Determine Investment Bounce Back

The investment for the industry for bounce back into the new normal is anywhere estimated to be around INR 120,000 crores a good chunk of this is going to be spent on the vaccination program in India. Our heatmap provides the snapshot of how the investment cycle is gearing up with increased pipeline of deals and investment flows. Markets have already recovered and factored this in their pricing.

2021 India Healthcare and Life Sciences Investment Heat Map
2021 India Healthcare and Life Sciences Investment Heat Map

Based on the Heat Map 2021, we have updated our revised Heat Map of 2020 published in June 2020 with the addition of Human Capital and New Normal Disruptions. Let’s relook at the board trends for 2021 in terms investment activity and trends.

Healthcare Financing

Pay cuts, job losses, low interest rates, reduced household saving and speed for digitization accelerates the ‘India Stack’ to reach to the consumer faster with innovative consumer financing products. Innovation into financing products and services for consumer financing of healthcare will see a few more players emerge. Many existing players are reworking their value proposition and plan to provide innovative products and services thus increasing coverage in 2021. However, as new demand accelerates, risk underwriting is equally important to avoid delinquency.

  • 2021 Outlook: Very Hot
  • What’s going wrong: regulation, maturity to scale, right bite for the consumers, reach and penetration, debt financing costs, slower non-discretionary and elective healthcare spend, delaying of healthcare spend
  • What’s going right: India stack digitisation, consumer borrowing to spend on non-electives, immediate gratification, reduced household savings supplemented by borrowings

Medical Education

Key shortages of healthcare frontline workers was very apparent during the Covid Crisis and now for the vaccination program. The need for regulatory regime to upskills is still being reworked. Healthcare could be the key job creator. Regulatory reforms are urgently required to push digitization and newer business models for upskilling existing workforce. Many of the debt servicing issues of the sector continue to persist with a few more NCLT/bankruptcy cases. A lot more exits expected and churn in ownership of assets due to consolidation activity.

  • 2021 Outlook: Moderate
  • What’s going wrong: regulation, corruption, no vision, skill shortages, alignment to new age care, increasing debt burden, new age skills certification, funding dry up
  • What’s going right: skill demand, NCLT closures, digitisation   

Med Tech Innovation and Life Sciences Discovery and Clinical Development

Focus in 2020 for clinical development had completely pivoted towards Covid vaccines and solutions and of global scale. India-Shinning moment with the two vaccines being awarded the emergency approvals has heightened investor interest in India. Investments will be selective in opportunities for Covid related therapeutic solutions. Social innovation would be the way forward. On the human capital, renewed interest of scientists to return back to India like in 2006-07 outsourcing boom.

  • 2021 Outlook: Hot
  • What’s going wrong: innovation pipeline, IP regulation, regulatory bottlenecks on clinical development, newer skill sets for research and acceleration
  • What’s going right: Human capital, cost advantage, emerging social innovation models,

Pharma and Therapeutic Solutions

M&A and consolidation activity will spiked up. Digitisation will be a key driver in 2021 and beyond. Some social impact models to counter the bottom of pyramid need gaps are emerging. Will not get mainstream in 2021 as China substitution and supply chain issues need to be resolved urgently inspite of positive policy push.

  • 2021 Outlook: Very Hot
  • What’s going wrong: price controls, policy log jam, wrong product portfolio, innovation and scale up, global or China-level cost competitiveness
  • What’s going right: cost advantage, distribution infrastructure, digital business models, Government incentive programs

Healthcare Providers

Funding and liquidity crisis continue after the lock down. Newer delivery models and hospitals of the future with asset-lite strategy emerge as costs build up and prices remain under pressure. Huge churn in asset ownership and consolidation activity. There will be no major action on PPP front. The telemedicine guidelines accelerate digital business models.

  • 2021 Outlook: Hot
  • What’s going wrong: margin pressures, price controls, GST slabs rationalization on inputs, execution of programs on the ground, PPP in healthcare, supply and demand mismatch in micromarkets, debt financing costs, gun powder churn, operating cash runway, liquidity and working capital crunch
  • What’s going right: Digital business models augmentation, asset-lite models

Healthcare Insurance

Complete liquidity crisis due to moratorium of renewals till October 2020. Innovative models for healthcare payors emerge in India for the middle bulge of India Stack for the middle 500 million that are paying out of pocket. As loss ratios will further mount, insurance rate will go northwards. Innovative products and pricing still a distant reality with the regulator in India. Many of the digital healthcare insurance players have to scale back and reduce their human capital and now need to rebuild in 2021. Don’t expect any IPOs.

  • 2021 Outlook: Moderate
  • What’s going wrong: margin pressures, product fit to consumer needs, product approvals, loss ratios, slow pace of innovation, operating cash runway, human capital reduction, consumer offtake and demand
  • What’s going right: Consumer demand, digitisation 

Health Retail

Muted consumer demand and discretionary spending due to reduce disposable income will result in slower growth and GMV pick up. Valuations will be a key issue. Consolidation and acquisitions expected for some to survive and grow. VC and PE interest is still muted and reviving their commitments to those ventures that survived the pandemic situation. Consolidation activity will increase. No serious IPO expected in 2021.

  • 2021 Outlook: Moderate
  • What’s going wrong: regulation, maturity to scale, slower consumer spending, operating cash runway
  • What’s going right: Consolidation, newer cross-vertical innovative business models


Discretionary consumer spending on wellness to pick up due to fear of Covid. Mass market moderately priced wellness products and business model innovation is still lagging behind. Post lockdown the growth has not be pre-lockdown due to consumer intertia. However, very innovative business models have emerged for the new normal. Investment activity is yet to pick up in 2021 as most of these ventures are in infancy.

  • 2021 Outlook: Moderate
  • What’s going wrong: regulation, maturity to scale, new mass market business models
  • What’s going right: newer cross-vertical innovative business models, Fit India

Alternative Therapies

The Babas promoting alternative therapies have been coming up with Covid related products and its controversies. MNCs and local businesses have entered in this segment affecting their market share and position. Consumers adoption to accelerate faster as these products become the only choice. In this sub-sector, we are witnessing some very interesting ideas for disruptions in the New Normal these are very much at the seed or angel investing stage.

  • 2021 Outlook: Hot
  • What’s going wrong: maturity to scale, consumer education and confidence, clinical research, new product development
  • What’s going right: discretionary consumer spending, newer cross-vertical innovative business models

Stay Safe and Happy Investing in the rest of 2021!