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The Covid-19 pandemic has been a challenging time for all of us, be it the individuals, the governments or the communities at large across the world. The two waves gone by and the ongoing wave of the pandemic have put our frontline workers and healthcare infrastructure to a big test.
Government has ensured to accord a high priority to the sector and has been dedicating significant resources to strengthen the healthcare infrastructure in the country. However, given the evolving scenario, there is always room for improvement for the healthcare sector to become better with processes, and world-class in delivery.
Here're our expectations from the government for the healthcare sector in the upcoming budget.
The foremost expectation from the budget would be an increase in the public expenditure on healthcare with the underlying principle of Availability, Accessibility and Affordability. The expenditure should be increased to 3% of
GDP over the next few years for us to reach a reasonable milestone of Atmanirbhar healthcare system.
It is critical to build more capacity, especially in semi-urban & rural areas and for vulnerable sections, such as children, senior citizens, economically weaker sections, and people with chronic conditions. An increase in the vaccination budget should also be prioritised.
To address critical gaps, the budget needs to lay out measures that catalyse investments in physical and digital healthcare infrastructure. While the sector is expected to grow and reach $372 billion in 2022 driven by increasing health awareness, rise in lifestyle diseases, growing uptake of preventive healthcare and increasing penetration of insurance, provisions are required to attract private investments especially in semi urban and rural areas.
The government may consider innovative public-private partnership models, beneficial tax rates and weighted-tax deductions on capital expenditure. Income tax holidays for investments in rural areas and viability gap funding for hospitals in smaller cities would increase Ayushman Bharat provider base and encourage investments across India.
Further, allowance for the healthcare sector to carry forward losses and unabsorbed depreciation on mergers under section 72A of the Income Tax Act, 1961 can also be proposed. Moreover, the budget also needs to address our low doctor-patient and nurse-patient ratio. Capacity expansion and creation of new medical colleges should be promoted to build a large pool of well-trained medical professionals in the country, along with skill development initiatives in allied healthcare services.
India ranks high on out-of-pocket expenditure (OOPE) on healthcare. Measures to bring down this OOPE and make healthcare more affordable will be a big relief for the citizens. Chapter VI-A of the Income Tax Act, 1961
includes deductions for the amount paid towards medical insurance and preventive health check-up.
The capping limit of said deductions can be enhanced to encourage health insurance coverage along with preventive healthcare. Further, co-pay-based insurance can be promoted for middle-income groups to ease OOPE which
may generally not get covered in the subsidised health services supported by the government.
Additionally, healthcare services are currently exempt from levy of the Goods and Services Tax (GST). Consequently, tax paid on inward supply is not available as input tax credit and the same is forming part of the cost of healthcare services which is ultimately borne by the patients.
Government should consider moving healthcare services to zero-rating. It will ensure eligibility of input tax credit which may help to reduce the cost of said services and a refund of unutilised input tax credit should also be allowed to provide additional working capital to the industry players.
This measure will ultimately benefit the end consumers to access quality healthcare facilities at affordable prices. Similar practice has been considered by other major countries under its GST legislation, thus the government may look to adopt the same best practices and align itself to global tax policies.
The government may consider pulling out input tax credit for expenses incurred for health and life insurance taken by employer for its employees from the list of blocked credits even if it is not obligatory for an employer under any law for the time being in force.
While the government’s initiatives such as the Production Linked Incentive (PLI) scheme to encourage domestic manufacturing of medical devices are a welcome move for Atmanirbhar Bharat, the government may consider reducing custom duties for advanced medical equipment and technology where we currently have a gap.
Technology will be a great tool to enable access to healthcare services in remote areas and minimize the pressure on healthcare system. Further, it can also be leveraged to bring down the cost of service. Government should encourage the HealthTech industry and innovation in related areas.
Ayushman Bharat Digital Mission is a progressive step towards the creation of integrated digital health infrastructure in the country. Under the mission, every citizen will get a digital health ID and will inter-connect the digital health solutions of hospitals across the country. We need more of such initiatives that enable the digital transformation of healthcare across the country.
All these measures can play an important role in the next union budget which may improve the overall operational efficiency of the healthcare sector.
The Service Exports from India Scheme (SEIS) was introduced by the Government of India in the Foreign Trade Policy (FTP) 2015-2020. The benefits under this scheme have already been notified till FY 2019-20 wherein health-related and social services are one of the categories which are eligible for the SIES scheme.
Government should consider introducing similar incentive schemes for this sector in the next Foreign Trade Policy as well as promote medical & wellness tourism and make it competitive globally. Hopefully, the budget builds on the momentum achieved and adopts a multi-dimensional approach for the holistic development of the healthcare sector in India.
This article was originally published in The Times of India.