Fin Min drops 2% health cess proposal

Finance Ministry has dropped the proposed 2% health cess to collect Rs 6,000 cr for funding insurance schemes.

india Updated: Feb 14, 2006 17:09 IST

Fearing burden on the people, the Finance Ministry has dropped the proposed two per cent health cess to collect Rs 6,000 crore for funding insurance schemes for below the poverty line families, Secretary General, Indian Pharmaceutical Alliance (IPA) Dilip G Shah said.

IPA, representing major national research-based pharmaceutical companies, had proposed introduction of a two per cent health cess for the poor to the Department and Chemicals and Petrochemicals. The department and the Health Ministry accepted the proposal and forwarded it to the Finance Ministry, Shah said on Tuesday.

The Alliance representing companies like Ranbaxy, Dr Reddy's and Lupin, works closely with the government on policy matters related to the pharmaceutical sector.

The alternative given was to raise resources from the General Budget. "The cess was meant to raise the additional resources. We have told the government if they do not want to do this, give the money from General Budget," he said.

"The cess was expected to give the Government Rs 6,000 crore. But the proposal has been shot down by the Finance Ministry and Committee of Secretaries as after reviewing the proposal they felt that with already education cess in operation, another cess was not required," Shah said.

The organisation has also insisted the government on better health infrastructure for the country.

"There is only one AIIMS in Delhi and one major cancer hospital in Mumbai. Every state should create one AIIMS and cancer treatment centre in every district to prevent hardships faced by the people in getting access to quality healthcare," Shah said.

The Alliance is also for more pharma research institutes in the country with expertise comparable to that of the IITs. "There is a National Centre for Pharmaceutical Education and Research run by the Centre in Chandigarh. We have asked the government to set up at least 10 more such institutes comparable to the IITs," he said.

These demands also form the part of the IPA's pre-budget memorandum submitted to the government.

According to Indian Drug Manufacturers' Association (IDMA) Secretary General the rejecting of the proposal though will not affect the companies, the poor for whom it was suggested, will not get the benefits.

Indian Chemical Manufacturers Association Director General DP Misra said a programme like health cess should have a check mechanism to ensure its success.

"We give money in the name of poor, but it does not reach them. Whatever cess is introduced tend to have add-ons. Strict vigilance is needed to ensure it is rightly utilised and not used for reducing fiscal deficit," he said.

First Published: Feb 14, 2006 16:37 IST