Budget 2014: Industry Body for Reduction in Cost of Providing Healthcare Services

India needs to reduce the cost of providing healthcare services that results in limiting investments in the sector due to long payback periods, an industry body has said.

To ensure this, the government should address the root cause of issues of access and availability, affordability and quality, industry body NATHEALTH has said.

To address the multiple issues facing the sector, the healthcare sector federation has submitted a pre-budget wish list to the government.

It has urged the government to lower the cost of setting up healthcare facilities. As part of this, it has called for finalising details of guidelines, scope and provisions under granted infrastructure status to the healthcare sector as this would help to raise lower cost funds.

"RBI's recognition of infrastructure status would enable fund raising through infrastructure bonds and via other agencies at lower rates," NATHEALTH said.

It would also lead to access to government and infrastructure-oriented funding (from agencies such as IIFCL, IL&FS, Rural Infrastructure Development Fund), it added.

The federation has also sought corporate income tax incentives on capital expenditure for facilities (green field hospitals) with 50 beds (this is currently allowed only for hospitals with 100 beds and above) and has also asked for extended tax holiday for establishing these facilities.

"Depreciation rate applicable on medical and pathological equipment and medical devices should be increased from 15 per cent to 30 per cent," NATHEALTH has said, adding that the government must also set up a healthcare infrastructure fund and a medical innovation fund.

Healthcare should be exempted from GST as the sector cannot afford levy of service tax, it said.

Domestic production in India should be encouraged by removing or rationalising custom and excise duties on raw material required for domestically manufactured medical devices, it added.

NATHEALTH has also requested the government to increase the people's capacity to pay by withdrawal of service tax on health insurance premium and to increase the limit of exemption for premiums under health insurance from the current Rs 15,000 to Rs 25,000.

Other proposals submitted to the government are providing a longer term (10 year window) for 250 per cent deduction of approved expenditure on R&D activities, creation of medical technology parks and free and concessional land for setting up private medical colleges given the huge demand supply shortage of doctors in the country.