Budget 2021 wishlist: Make healthcare stronger

In last year’s budget, the healthcare sector received paramount focus. The upcoming budget should review the challenges brought by the pandemic and appropriately allocate more resources to meet the demands of the healthcare sector.

Listed below are main points of my Budget wishlist:   

Increase budgetary allocation for healthcare sector

From the healthcare sector perspective, my clear expectation is increasing budgetary allocation up to 5% of GDP, spread across three years. This will also reinforce the National Health Policy released in 2017, which gives a clear vision and road map on how the Indian healthcare ecosystem, especially infrastructure and human resources can be upgraded.

The 5% allocation should be towards public health issues — mainly preventive health, wellness centres which were announced as part of Ayushman Bharat, Universal Immunisation programme, infrastructure and other aspects of health like Swachh Bharat, potable drinking water, Ujjwala scheme (LPG ccheme), etc.

Nutrition for children is also an important aspect. A nutritious breakfast with the on-going mid-day meal programme to children in public schools will improve the overall health.

Declare healthcare as a strategic sector like agriculture

We should be able to access credit at much lower interest rates. Cost of debt financing is extremely high which creates operational issues and challenges. If the interest rate (4-6%) on debt, is as low as that of the agriculture sector, it will improve viability and more investments will flow, subsequently creating infrastructure.

Hospital infrastructure and capital

Hospitals should be encouraged to seek accreditations like NABH (or NABL for laboratories) and 100% deduction should be incurred for all such expenses. Currently, the benefit for capital expenditure incurred for hospitals is only for a minimum capacity of 100 beds (under section 35AD). However, there is a large scope for enhancement in tier-3 and beyond. For the successful rollout of the Ayushman Bharat programme, it is recommended to pass on the benefits of capital expenditure to build new hospitals of smaller bed capacities and not restricting it to 100 beds.

Budget should aim for creation of specific healthcare zones similar to Special Economic Zones in key geographies where subsidies are extended for input cost, especially for land, electricity and greater Floor Space Index (FSI) for hospital buildings. This will not only help create clusters for hospitals but also for med-tech and will be a massive boost for the economy.

Tax imperatives for healthcare sector

Many hospitals have invested in high-end capital equipment for diagnostics and setting-up of molecular labs for testing COVID-19 patients. Such capital expenditures should receive a tax benefit under 35AD with weighted deduction of capex mainly for combating COVID-19.

Reduction in a tax deduction, where corporate payers deduct tax at 10% of the gross revenue paid to the hospitals and refund of such excess taxes take up to 2-3 years, leading to a blockage of working capital of the hospital. If a tax deduction is reduced to about 5% and reimbursement is prompt, it will subsequently improve the working capital of hospitals.

Preventive health and digitisation of health records

Incentivising the population through tax breaks, like on visiting a doctor when one is healthy and not when sick. Preventive health check-ups should be incentivised in formal and informal sectors through tax exemptions. It is currently Rs 5,000 per person and should be increased to Rs 20,000 under 80D, especially with the growing risk of non-communicable diseases. An increase in the limit of medical insurance premium under 80D should also be allocated.

Under the National Digital Health Programme, income tax incentives for investment in digitalisation of health records or HIS (Hospital Information System) of various hospitals should be made available. A 250% deduction on the investment made is being proposed.

Medical Travel

Healthcare is a key sector that earns foreign exchange for the country through medical value travel and is a big boost for the Indian economy. Thus, medical treatment in India must be considered as export of services, foreign exchange earned should be fully exempted from taxes, increasing Medical Value Travel in India.

(The writer is CEO Aster India, Aster DM Healthcare. Views expressed are personal)