Economics of Compassion

There are policy decisions that tweak systems, and then there are those rare reforms that have the power to reshape lives. The 56th GST Council’s comprehensive healthcare tax reforms fall decisively into the latter category. As someone who has watched India’s healthcare landscape evolve over more than four decades, I can say with conviction: this is a game-changer.

When Governance Meets Compassion

Picture a mother in Tier-2 India, watching her child battle a rare genetic disease. Until recently, the astronomical cost of treatment meant impossible choices—sell the family home, borrow at crushing interest rates, or watch helplessly. The government’s decision to fully exempt 36 life-saving drugs from GST changes this brutal calculus entirely and brings a smile to the mother’s face.

These aren’t incremental adjustments. Cancer therapies, cardiovascular medicines, treatments for genetic conditions and rare diseases—all now completely GST-free. When coupled with the National Policy for Rare Diseases that provides up to Rs 50 lakh in financial assistance, we’re looking at a comprehensive safety net for the 72 million Indians affected by rare diseases. This is governance with a human face.

The Mathematics of Hope

Numbers often obscure human stories, but in this case, they illuminate them. Consider what these reforms mean in practice:

A patient managing a genetic cholesterol disorder saves Rs 48,000 annually (approximately). For someone battling Fabry disease, a rare disease affecting the kidneys, heart, and nervous system, the treatment cost reduction can be up to Rs 19 lakh per year. Even for more common chronic conditions, the relief is substantial, with up to Rs 6,000 saved annually for diabetes and hypertension patients.

These savings don’t just ease budgets—they save lives. Every rupee saved ensures treatment adherence, prevents families from falling into medical bankruptcy, and allows patients to maintain dignity and security while fighting illness.

Beyond the Medicine Cabinet

The genius of these reforms lies in their comprehensive sweep. By slashing GST on essential medicines from 12% to 5%, medical devices from 18%/12% to 5%, and diagnostic equipment from 12% to 5%, the government has addressed the entire healthcare value chain. The complete exemption of health and life insurance premiums is particularly significant—it recognises that financial protection is as crucial as treatment itself.

This isn’t just about making healthcare affordable today; it’s about making it sustainable for the future. By incentivising local manufacturing of essential and complex generics, the reforms align with ‘Atmanirbhar Bharat’ while ensuring India isn’t held hostage to import dependencies. A simplified tax structure means pharmaceutical companies can focus on innovation and quality rather than compliance gymnastics.

The Ripple Effect

Here’s what excites me most: these reforms create virtuous cycles. Lower costs mean better treatment adherence. Better adherence means improved health outcomes. Improved outcomes mean reduced long-term healthcare burden. Affordable preventive care means early intervention. Early intervention means better prognosis and lower overall costs.

Suddenly, the daily wage worker doesn’t have to choose between medication and meals. The middle-class family doesn’t have to liquidate savings for a health emergency. The elderly don’t have to depend entirely on children for medical expenses. Health insurance becomes accessible, not aspirational.

A Template for Viksit Bharat

As India aspires to become a developed nation by 2047, this reform offers a crucial insight: economic growth without health security is hollow progress. The 56th GST Council has recognised that a ‘Viksit Bharat’ must first be a healthy Bharat—one where a medical diagnosis doesn’t spell financial catastrophe, where treatment is determined by clinical need rather than paying capacity.

This is what transformative governance looks like—not tinkering at the margins but reimagining fundamentals. It’s about recognising that healthcare isn’t a luxury good to be taxed but a fundamental requirement for citizens to be enabled.

The Road Ahead

Of course, tax reforms alone won’t solve all of India’s healthcare challenges. We still need more doctors, better infrastructure, stronger primary health centers, continued pharmaceutical innovation and creative health insurance products. But make no mistake: these GST reforms have moved the needle significantly. They’ve demonstrated that when policy is crafted with empathy and vision, real change is possible.

As post-reform sales data and case studies emerge, we’re seeing validation of what was always morally obvious: accessible healthcare isn’t just good ethics—it’s good economics. Healthy citizens are productive citizens. Protected families are stable families. An insured population is a confident population.

The 56th GST Council has given India more than tax relief. It has given millions of families something far more valuable: HOPE. Hope that illness doesn’t mean destitution. Hope that treatment is possible. Hope that tomorrow can be healthier than today.

In the story of Viksit Bharat’s journey, this reform will be remembered as a turning point—the moment when healthcare truly began its journey from privilege to right, from aspiration to reality.

Views expressed are personal. The writer is an Honorary Professor at National Law University, Hyderabad