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Sitharaman Introduces Dual Cess Bill to Fund Health & National Security

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  Published in Business and Finance on Thursday, December 4th 2025 at 5:56 GMT by ThePrint

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Finance Minister Nirmala Sitharaman Tables Health‑Security‑and‑National‑Security Cess Bill in Parliament

On a brisk Thursday morning, Finance Minister Nirmala Sitharaman brought to the floor of the Lok Sabha a bold new piece of legislation – the Health‑Security and National‑Security Cess Bill. The bill is an attempt by the central government to institutionalise a dedicated revenue stream that will feed two intertwined priorities for India: building a resilient health‑security system that can fend off future pandemics and creating a robust national‑security fund that can support defence and strategic autonomy.

Why a Cess?

The COVID‑19 pandemic exposed serious gaps in India’s public‑health infrastructure and revealed the fragility of a system that had been largely financed through the National Health Protection Scheme (Ayushman Bharat) and ad‑hoc allocations. In her remarks, the Finance Minister emphasised that “the pandemic was a wake‑up call – we need a reliable, predictable source of funding that can be mobilised swiftly when the next health shock hits.”

Similarly, India’s geopolitical environment has become more complex. In the wake of tensions along the border with China, the rapid modernization of the Indian Armed Forces, and the rise of asymmetric threats, the government is keen to earmark resources for a “national‑security cess” that can bolster defence procurement, training, and critical infrastructure.

Key Provisions of the Bill

The bill also contains a “safety‑net” clause: if the cess revenue dips below a specified threshold for two consecutive years, the government will be allowed to temporarily suspend the cess to avoid undue pressure on the private health sector.

How the Cess Fits into India’s Health‑Security Narrative

A quick look at the Health‑Security Framework (linked in the article) shows that the Ministry of Health has already set up a National Health Protection Fund (NHPF) to support pandemic preparedness, stockpiling of personal protective equipment (PPE), and the development of a digital health surveillance platform. The cess is intended to feed into that framework, ensuring a steady cash‑flow that can be deployed without waiting for budgetary approvals.

The Ministry’s Health‑Security Strategy also emphasises the importance of strengthening public‑health infrastructure in tier‑2 and tier‑3 cities, building a regional pandemic‑response unit, and creating a strategic reserve of vaccines and therapeutics. The Health‑Security Cess will provide the fiscal muscle to achieve these goals, with a dedicated earmark that cannot be diverted to other programmes.

National‑Security Funding: A Strategic Response

In the defence space, the National Security Fund (NSF) is a concept that has been in the policy pipeline for a while. The NSF aims to:

• Modernise the armed forces: Funding for acquisition of advanced platforms such as the Arjun Mk III infantry fighting vehicle, HAL Light Combat Aircraft, and maritime patrol aircraft.
• Support indigenous production: Incentivise local defence‑industrial clusters and encourage technology transfer from global partners.
• Enhance cyber‑defence: Build a dedicated cyber‑security centre to counter state‑sponsored hacking.

The National‑Security Cess will ensure that this fund receives a continuous, predictable stream of revenue, freeing up the defence budget from the fiscal pressures of other ministries.

Parliamentary Dynamics

The bill was tabled on the second day of the parliamentary session after a briefing session with the Finance Committee. The Ministry of Finance’s “Finance‑Bill Brief” (a document linked in the article) noted that the government expects a smooth passage, citing the bipartisan support for pandemic preparedness and national‑security initiatives.

Opposition parties, however, expressed concerns about the potential impact on private hospitals and the health‑insurance industry. One opposition MP warned that a “high cess on private healthcare could push patients into the informal sector and erode access to quality care.” The Minister’s spokesperson countered that the cess is capped at a modest rate and that the revenue will be reinvested in building a stronger public health system, ultimately benefiting all.

In the Rajya Sabha, the bill will be scrutinised by the Committee on Finance and the Committee on Defence. The Rajya Sabha‑Finance Committee has already requested a detailed cost‑benefit analysis of the proposed cess rates, which is expected to be tabled within a week.

What’s Next?

If the bill receives assent from both houses, the Ministry of Finance will prepare a Revenue Forecast Report to outline the expected inflows over the next decade. The Health Security Fund will be constituted immediately, with an initial disbursement earmarked for expanding the Integrated Disease Surveillance Programme in rural districts. Meanwhile, the National Security Fund will begin allocating resources to a pilot project for indigenous production of low‑cost air‑purification units, an area that has received heightened attention in the wake of COVID‑19.

The Parliament will also hold a series of “policy workshops” to outline the operational framework of both funds, involving stakeholders from the health sector, civil society, and the defence community. The workshops will aim to craft a “Roadmap to 2030” for health‑security and national‑security resilience.

Bottom Line

The Health‑Security and National‑Security Cess Bill is a strategic attempt to transform India’s health‑security and defence finance landscape. By earmarking revenue for dedicated funds, the government seeks to ensure that the country can respond swiftly to both biological threats and geopolitical challenges. Whether the bill will pass smoothly remains to be seen, but its underlying logic – that a resilient nation must have reliable, earmarked funding for health and security – resonates strongly in the post‑pandemic world.

If the measure is adopted, India could set a precedent for other emerging economies, demonstrating how to use fiscal tools to build resilience against shocks that transcend borders. As the bill moves through Parliament, all eyes will be on how the government balances the need for robust funding with the potential implications for private providers, insurers, and the broader economy.