Healthcare industry awaits infra status

July 31, 2009 11:04 am

Healthcare industry awaits infra status
 
The flourishing and robust healthcare industry has long been requesting the government to provide infrastructure status to induce the private sector to invest, while keeping in mind the long gestation period for break-even of hospital projects. The industry is hopeful that in the new annual budget, the government would grant ‘infrastructure status’ to the sector. It will help raise investments to create a modern healthcare delivery system.
 
Apart from that, there should be special incentives and concessional interest rate for hospitals and diagnostic centres being established in smaller towns and rural areas. The last year’s budget saw the government granting tax holidays to healthcare establishments starting in tier 2 and 3 cities. Similar initiatives need to be carried out this year as well.
 
The government should also provide special tax concessions for encouraging Public-Private Partnership initiatives in the industry. The excise duty and value-added tax being charged on medical equipment and specialty medical consumables should be completely removed to reduce cost of diagnosis and treatment.
 
During the Union Budget 2008 speech, Finance Minister P. Chidambaram said, “Healthcare was one of the pillars of social sector reforms in India.” He substantiated his announcement with an increase of public spending by nearly 15 per cent, taking the same to Rs 16,543 crore. Moreover, the reforms also saw a five-year tax holiday for hospitals in non-tier-1 cities, Rs 12,050 crore for the National Rural Health
Mission and Rs 993 crore for HIV/Aids prevention.
 
Accessibility and affordability should be the main themes around which the budget expectations for this year’s healthcare revolve around. The government should focus on quality healthcare delivery through effective public and private participation. While on one hand the government spending should increase substantially; on the other, healthcare policies should create a congenial business environment for private players to invest.
 
While the National Rural Health Mission continues to reap good results, the time has arrived to initiate a similar policy for the economically weaker sections of urban society.
 
Today 80 per cent of health care in India is out of pocket, which is pretty significant in terms of cost for an individual if something happens to his family member. Not only should the government put in the requisite insurance premium for those who can’t afford quality medical care, but it should also introduce separate licenses for health insurance and relax capital adequacy norms to encourage more private sector
participation.The health care sector looks forward to the annual budget for incentivesising research and annual development in the country. To promote clinical research, research and development, government would take steps to reduce import duty to nil on inputs for research and development activities. Also government should introduce tax exemptions on the foreign currency payments to overseas consultants for research and development units. Moreover, the ‘free treatment’ conditions imposed on import of equipment by hospitals to avail customs duty exemption should be limited to a particular period.
 
Promoting public-private partnerships is another area where the healthcare industry is lining the expectation to help bring down costs. Moreover, in terms of manpower mobilization, the industry looks forward to the government for facilitate visa procedures for healthcare professionals to work overseas.
 
These last few years has seen consistent growth in the Indian healthcare sector which has a very promising future ahead, and it is expected that the above mentioned reforms in the budget would help in accelerating and sustaining the growth path in the industry on the whole. The healthcare sector had been earmarked as one of the special sectors that would help India became a global giant over the last decade.