Union Budget 2021: Healthcare should be accorded ‘National Priority’ status

It is crucial that the government provides appropriate fiscal incentives and creates a sustainable public policy to encourage investment in private healthcare infrastructure

Alok Roy January 29, 2021 11:58:08 IST
Union Budget 2021: Healthcare should be accorded ‘National Priority’ status

Representational image. PTI

In Budget 2021, prioritisation of the healthcare sector will be of utmost importance. While India fought COVID-19 reasonably well and with vaccines just being rolled out, the pandemic has shown us all that health is the new normal and going forward it shall be significantly measured by sanitation, hygiene and preventive healthcare. With a market size of 1.4 billion people, the government must look into attracting investments into these sectors via existing as well as startups.

Attracting investments in healthcare startups

The solution to address the gap in accessibility and affordability of healthcare is to ensure home-grown technology-driven innovations that facilitate production and delivery of medical devices within the country. However, policymakers must use this opportunity to align resources/budgets to ensure accessible, equitable, and quality healthcare for all citizens. This needs to be addressed in the Budget with a specific allocation for healthcare delivery, personnel, infrastructural developments, and a special focus on innovations by supporting startups in this field.

The government can consider assigning healthcare startups under MSME category which will enable them to get the extended advantages. Banks should also consider flexibility in lending to such startups as it will give the much-needed boost to not just the startups but also to the healthcare industry.

Digitisation of healthcare

In 2020 the healthcare sector has been quick to change and adapt to digital transformation. Going forward, such changes should go to the next level ably supported by Artificial Intelligence, Big Data, Analytics, electronic records and telemedicine. While we strive for seamless digitization, we also have to work for protection against data breaches and safeguard all such data.

Expectations on taxation vis-a-vis healthcare

It is also crucial that the government provides appropriate fiscal incentives and creates a sustainable public policy to encourage investment in private healthcare infrastructure. Hospitals should be included under the definition of ‘industrial undertaking’ u/s 72A of IT Act. This has been a long-standing demand, critical to expedite private investment in capacity building and to ensure that healthcare is treated at par with other sectors.

Currently, the benefits of a deduction for CAPEX are extended only to hospitals having a minimum capacity of 100 beds. No benefits are provided to smaller hospitals/nursing homes in rural areas. Given that there is an urgent need for expansion of healthcare facilities in smaller cities and rural areas, the benefits u/s 35AD of IT Act should be extended to hospitals having a minimum of 50 beds in tier II, III and IV cities and, a minimum of 25 beds in rural areas.

Primary and preventive care is vital for a strong healthcare system. It is recommended that tax exemption on preventive health checkups be raised from the current Rs 5,000 per person (Rs 7,000 for senior citizens) to Rs 20,000 u/s 80-D of IT Act. Further, while grappling with COVID-19 , hospitals have had to make substantial capital expenditure towards making structural changes in the building layout, air-flows etc., and significant fresh investment in medical equipment, severely straining cash flow and operational sustenance. On the GST front, the government needs to consider the zero-rating of GST for healthcare services.

Healthcare Infrastructure investments

The finance ministry has devised an inspiring Rs 111 lakh crore National Infrastructure Pipeline (NIP) for 2020-25, which includes Rs 1.69 lakh crores for infrastructure development projects for healthcare. There is also a need to increase the proportion of allocation on health research in overall health expenditure to at least 6 percent of the funds allocated to the Ministry of Health and Family Welfare.

Healthcare should be accorded ‘National Priority’ status, as was done for the IT sector, to bring in requisite attention and investment. Innovative long-term financing structures, special healthcare zones, subsidised cost for land and electricity, higher FSI for hospital buildings are some of the measures needed for enhancing infrastructure creation in healthcare.

The writer is chair, FICCI Health Services Committee and Chairman, Medica Group of Hospitals

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