Healthcare still not a priority for Government of India

NEW DELHI - Feb. 6, 2018 - PRLog -- Healthcare, one of the fastest growing industries in India, the fourth largest employer and a sector with huge socio-economic impact, yet the Government of India fails to recognise it as a ''Priority" sector.

The Budget of 2018 saw the announcement of the Ayushman Bharat Program - "world's largest government funded healthcare program" of providing Rs 5 lakh medical cover per year for hospital expenses each, to 10 crore poor and vulnerable families or nearly 500 million people under the National Health Protection Scheme. A truly welcome move that could easily prove to be a big game changer for Healthcare if implemented properly, making Healthcare more accessible and affordable for almost 40% of the population.

However, this lone boost is not enough to make one of our fastest growing industries into a sustainable one. The increase of only 12% in budget allocations for health is grossly inadequate for a sector that is also responsible for impacting socioeconomic growth of a country.

The burden of healthcare continues to rest largely on the private sector that accounts for 74% of our hospitals and 40% of our hospital beds in metros, tier I and tier II cities and 74% of healthcare expenditure is also accounted for by private healthcare.

India needs additional 3 million beds to achieve the target of 30 beds per 10,000 people by 2025 with an investment to the tune of USD 230 billion and an additional 1.54 million doctors and 2.4 million nurses are required to meet the growing demand for healthcare. But do we have the necessary support from the government to work towards bridging this gap when Healthcare is not even accorded a "PRIORITY" Sector status in the country.

WHY IS HEALTHCARE STILL NOT A PRIORITY SECTOR?

Following are some of the critical aspects that impact this sector negatively and prove to be huge stumbling blocks in its sustainable growth and yet there is no move from the Government to address these issues:

PRIORITY LENDING RATES: Healthcare projects are all highly capital intensive. The government itself spends over thousands of crores while setting up AIIMS like Institutes and yet this sector has till date not been accorded a priority status in terms of accessing easy and long-term lending support. Entrepreneurs have to end up paying high commercial loan rates for acquiring land, setting up a hospital, loans for equipment, loans for ambulances that comes under category of commercial vehicle loans. And all these naturally adds to the overall cost of healthcare that is borne by the user of these services, the common man.

The last revision of priority sector classification saw the inclusion of Renewable Energy, Social Infrastructure, Medium Enterprises to the existing sectors like Agriculture, Micro and Small Enterprises, Education, Export credit and Housing. SIDBI has been allowed to directly offer loans to MSMEs at 8.1% which is below market rates for tenures up to 5 years but does that help Healthcare as a sector?

Healthcare is still not accorded that priority status. One may argue that under Social Infrastructure sector  a borrower could set up Healthcare Facilities but which healthcare facility can be set up with a boost of mere Rs 5 crore loan, even if its earmarked for tier 2 to tier 6 centers.  When we talk about building capacities of 100 bedded hospitals or more with state of the art equipment, how far will Rs 5 crore take the project?

It is time that the government revised this outlook to accord Priority Status and Supportive Lending Rates conducive to setting up more viable Healthcare centers across the country, more so in healthcare deficient areas

LACK OF STANDARDIZED GOVERNMENT INCENTIVES TO SET UP HEALTHCARE PROJECTS:

Some of these could be:

- Land allocation at subsidized rates with stamp duty waiver /concessions, concessions on registration, property tax, conversions and single window clearance for Healthcare Projects

- Subsidy in utility bills for electricity, water, gas

- Tax holidays and benefits - The benefit of section 10 (23 G) of the IT Act has been extended to financial institutions that provide long-term capital to hospitals with 100 beds or more but what about 10 year tax holidays for the hospitals

- Accelerated depreciation

- Interest and capital subsidy

- FAR/FSI enhancement  for Hospital Projects

- Zero GST on Life saving Equipment and Drugs - Critical care equipment like Ventilator, Oxygen Concentrator, BIPAP, and CPAP are under 12 percent GST and 7.5 percent Customs Duty while Mobility Assist equipment like wheel chair / Walking stick / Crunches are under 5-7.5 percent GST. Under VAT they were tax free. Spare parts for all medical equipment are being taxed at 28 percent GST.

Some state governments do have Healthcare Investment  Promotion Schemes like Madhya Pradesh, Odisha but most follow their respective industrial policies where again Healthcare does not get accorded Priority Status even as Manufacturing units get various benefits.

Addressing these incentives in a standardized manner across the country could go a long way to boost the development of healthcare projects in a cost effective manner.

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This is part of Kyra Healthcare Knowledge Series to highlight queries on current and future issues related to healthcare in India and globally, drawing from our group's collective insights, interactions with the industry stakeholders, primary and secondary research. These series aim to promote dialogue among all stakeholders to accelerate corrective and supportive measures and drive knowledge growth and innovations for Healthcare Industry.

About Kyra Healthcare Consulting: Kyra is a Healthcare Strategic and Business Consulting, Healthcare Investments and Turnkey Projects company focused on Hospital Business Forecasting, Hospital Operations Planning, Hospital Facility Planning, Hospital Architectural Design and Hospital Services Engineering apart from consulting in Biomedical devices and Pharmaceuticals space.
Website: http://www.kyraconsulting.com