Healthcare sector looks at govt for working capital and preferential funding support
Indian healthcare sector is now looking at the government for working capital and preferential funding support. This is because there are no incentives to stimulate the establishment of smaller hospitals and nursing homes in rural regions, making it difficult for firms to establish chains of smaller hospitals.
While working capital is the amount of cash a healthcare provider can safely spend, preferential funding helps to address a host of future needs.
We see the need that healthcare providers must be given access to working capital and preferential funding. The tax advantages under Section 35AD should be increased from 100 percent to 150 percent. Currently, the benefits of capital expenditure deduction are only available to hospitals with a minimum capacity of 100 beds, said Udayan Lahiry, Managing Director, Medica Group of Hospitals.
While the sector is looking at a hike in public health spending to 2.5-3.5 percent and that the focus should be on creating accessible healthcare infrastructure, providing adequate doctors, incentivising quality patient care and creating a digital backbone for the future.
There is an urgent need to increase the number of smaller hospitals, particularly in tier 2 and 3 cities and rural regions, to successfully execute the Ayushman Bharat program. As a result, the benefits under Section 35AD should be extended to hospitals with a minimum of 50 beds in tier 2 and 3 cities and a minimum of 25 beds in rural areas. Furthermore, these benefits should be extended to existing hospitals that invest in significant growth, he added.
Interest subsidy for starting a new health care facility & capital subsidy for capital expenditure should be incorporated in the budget. This will have a rippling effect in ancillary industries working hand in hand with healthcare, Lahiry noted.
As we prepare ourselves for the post-pandemic era, stable policy frameworks and incentives to sustain the viability of the healthcare sector via Foreign Direct Investment (FDI), increasing access, creating an eco-system of research & innovation, reinforcing patient safety and adding to the skilled professionals of India is what we all are looking forward to hearing from the Union Finance Minister, said Lahiry.
According to Prateek Ghosal, Chief Strategy Officer, Ujala Cygnus Group of Hospitals, to attract more private sector investment in Tier 2 and 3 cities of India, healthcare should be given infrastructure status which will enable access to low-cost funding as well as provide tax benefits, further reducing input costs.
During the COVID-19 pandemic, the RBI incentivised liquidity for emergency healthcare services by the extension of credit under priority-sector classification, this move should be made permanent, particularly for projects focused on creating infrastructure in Rural India. Further, to ensure success of subsidy schemes and Viability Gap Funding under various state and central policies, the overall construct needs to be further streamlined by enabling allocation of capital within specific timelines, supporting not only infrastructure and equipment funding but also manpower and operational funding, providing flexibility in pricing and creating a robust process to channel patients. This will ensure that PPP projects are sustainable in the long run, said Ghosal.
Source : 1
AuroBlog | Clinical Research Blog | Aurous HealthCare CRO, India 