Deepak Samant – Director Finance, Hinduja Hospital, Mumbai
India is a country with majority of the population living below poverty line, where medical treatment is not within the reach for most people. Thuserefore, the main expectation from this budget is to arrest the ever-increasing cost of healthcare wherever possible. The budget can impact two major cost factors in healthcare i.e. ever increasing cost of medicines & medical consumables, and costly medial equipment with faster redundancy due to continuous technological advancements.
Government must confer a ‘very special’ status to this industry with major tax reliefs on all direct and indirect tax front in this budget to bring these two cost factors under control. The loss of revenue to government from these tax concessions will be only a fraction of the cost of providing affordable healthcare by government to all.
Secondly, government should increase the mediclaim premium threshold substantially under sec 80-D from current levels of Rs 15000/- as the increased cost of healthcare has sent the mediclaim premiums soaring. This move will marginalize the healthcare cost to some extent for policyholders.
Manpreeet Sohal, Director, Fortis Hiranandani Hospital (Vashi), Nnavi Mumbai
The Indian economy is presently performing satisfactorily and growing on the basis of strong domestic consumption and increasing demand. It is therefore important to sustain this demand, especially in view of the spilloverspill over effects from international economic developments on the Indian economy. In this context, while the rate of interest should be cut, it is being increased because of domestic compulsions and this is hampering the flow of funds into India.
Fiscal parameters are expected to be rationalised and reset in 2012 when the new Direct Tax Code (DTC) is introduced and the Goods & Services Tax (GST) is expected to be in place. There is a lead time required to prepare for these changes and the forthcoming Union Budget 2011-12 can provide Indian industry with this time by maintaining the status quo and refraining from making too many changes on the fiscal front.
In the healthcare field, hospitals should be covered under Infrastructure as India’s healthcare sector needs serious addition of capacity to meet WHO standards. It is the need of the hour that hospital projects be prioritised and treated as ‘Infrastructure Projects’ for the purpose of lending by FI’s and Banks.
Also, under current regulations, FCCB / ECB are subject to a ceiling of USD 100 million. Considering the prevailing business environment, it is suggested that the limit under automatic route be increased to USD 250 million.
Dr Rajeev Boudhankar, Vice President, Kohinoor Hospital, Mumbai
Our demand from the Union Finance Minister is to declare healthcare as infrastructure status. Giving infrastructure status to the healthcare sector will help in attracting more investments necessary to narrow the demand supply gap in hospital services. India is a signatory to the Millennium Development Goals (MDGs). Three out of the eight goals pertain to healthcare. India’s ability to achieve the healthcare related MDGs depend on her ability to narrow the demand supply gap in healthcare services. Investments in healthcare infrastructure have not kept pace with population growth and increasing urbanisation. India’s average of around 70 beds per 100,000 people compares poorly to the world average of 396 beds per 100,000. Increasing the number of beds to around 200 per 100,000 would mean creation of 1.3 million new beds, which would require fresh investments of $80 billion. Health is a state subject in India and cash strapped state governments are not likely to be able to provide budgetary support for such investment. The private sector therefore will have to step in and provide bulk of these investments.
The healthcare sector’s break even period in India is long at 3-5 years. Given these constraints, the private sector needs adequate incentives to enable them to make the huge investments needed to narrow the demand supply gap. Providing infrastructure status to healthcare would enable long term funding from agencies at low rates of interest. Providing infrastructure status to healthcare would also exempt them from payment of service tax to commercial or Industrial construction companies, reducing input costs of healthcare projects. Healthcare companies can also channelise overseas capital to projects in India through the ECB route. At this point, the ECB limit for hospitals is $100 million per year; providing infrastructure status will raise this cap to $500 million per year.
Healthcare projects in selected non-urban areas that commence operations in the period April 1, 2008 to March 31, 2013 will enjoy a five year tax holiday under section 80IB as per budget 2008. Infrastructure status to healthcare would enable them to enjoy a 10 year tax holiday. This is particularly important for healthcare sector since the five year tax holiday is too little given the fact that hospital projects take 3-5 years to break even. This will make healthcare sector more attractive for investors
The budget must also address the areas of healthcare insurance and medical education where further reforms are called for. This will make also healthcare sector more attractive for investors. The government spend in healthcare as percentage of GDP is hardly 0.99 per cent at present ; this spend should be raised to at least 3 per cent of the GDP.
S L Narayan, CFO, Max Healthcare, New Delhi
After much follow up and repeated pleas over the years, we finally saw some relief announced at the time of the Union Budget 2010. But unfortunately, we have had no meaningful impact due to the ineffectual nature of that fiscal initiative. The tax holiday envisaged under section 80IB is of very little consequence for the healthcare industry as it is applicable only to hospitals in non metro locations and hospitals with less than 100 beds. Further, the exemption is limited to five years which totally ignores the fundamental ground reality of hospitals, which are long gestation projects. It is well known that significant tax losses will be incurred during the initial period, and accordingly we request that a tax holiday be extended irrespective of location and size and for any block of 5 years during a 10 year period at the option of the assessee.
Almost everyone in the bureaucracy and in the Government is aware of, and talks about the importance of building a world class nationwide medical ecosystem, from primary healthcare centres to diagnostics to high end tertiary care. We also hear that much of the investment ought to come from the private sector. But it is baffling that no action has been forthcoming despite years of petitioning for grant of ‘infrastructure’ status for our sector. Hospitals need to be created with a sense of urgency, given our abysmally low ratios as compared to global benchmarks of beds per 1000 citizens. Granting an ‘infrastructure’ status to healthcare would result in lower cost of funds and reduce the break even period for a long gestation project.
Other areas that cry for rationalisation include the levy of service tax on hospital services, which makes the cost of healthcare delivery cost go up for common man. We are already grappling with a spiraling inflation in the country, thanks to the recent hikes in commodity prices ranging from onions to and petroleum products. Hence, it is suggested that healthcare sector to be outside the ambit of service taxes.
Finally, the FM needs to look at the deleterious consequences of tax cascading that impacts hospitals under implementation. Indirect taxes in the nature of VAT and service tax incurred during construction period are requested to be allowed for set off against taxes payable on day to day operations for reducing the impact of taxation.
Dr S Manivannan, Joint Managing Director Kavery Medical Centre & Hospital, Trichy, Tamilnadu
Accord infrastructure status to health sector to facilitate easy access to affordable funds for private sector.
Making health insurance mandatory in organised sector
Creative conducive atmosphere to start paramedical institutions to address the shortage of skilled manpower
Government funded industry parks to focus on manufacturing medical equipments. This will help to reduce the input costs
Tax sops for institutions involved in public private ventures will enthuse many players to venture into this segment
Tax benefits for hospitals and practitioners setting hospitals in tier 2 and tier 3 cities
More funds need to be allocated for chronic disease prevention like diabetes, hypertension and kidney diseases
These diseases will increase the healthcare burden of the State. Prevention has to be undertaken by the Government.