India doubles healthcare spend, opens up insurance in ‘get well soon’ budget

India proposed doubling healthcare spending in an annual budget unveiled on Monday and lifted caps on foreigners investing in its vast insurance market to help revive an economy that suffered its deepest recorded slump as a result of the pandemic.

Delivering her budget statement to parliament, Finance Minister Nirmala Sitharaman projected a fiscal deficit of 6.8% of gross domestic product for 2021/22, higher than the 5.5% forecast by a recent Reuters poll of economists.

The current year was expected to end with a deficit of 9.5%, she said, well up from the 7% expected earlier.

India, which has the world’s second highest coronavirus caseload after the United States, currently spends about 1% of GDP on health, among the lowest for any major economy.

Sitharaman proposed increasing healthcare spending to 2.2 trillion Indian rupees ($30.20 billion) to help improve public health systems as well as the huge vaccination drive to immunise 1.3 billion people.

“The investment on health infrastructure in this budget has increased substantially,” she said as lawmakers thumped their desks in approval.

Millions of people lost their jobs when the government ordered a lockdown last year to combat the coronavirus.

The government estimates the economy will contract 7.7% in the current fiscal year ending in March but then recover to show 11% growth in 2021/2022,

That would make India the world’s fastest growing major economy ahead of China’s projected 8.1% growth, but the government said it would take the economy two years to reach pre-pandemic levels.

“In a time of unprecedented economic stress, the government’s responsibility was to spend enough to revive the economy or else face enormous human suffering,” said Anand Mahindra, chairman of Mahindra group, an autos to technology conglomerate.

“So I had one expectation from this budget: that we should be very liberal in terms of the targeted fiscal deficit. Box ticked.”

Indian stock markets extended gains after Sitharaman concluded her speech and market players said they were relieved she had not announced any tax hikes.