Government Must Increase Investment In Healthcare Sector To 2.5-3% Of GDP By 2025, Says CII


2021-01-12 08:56:08

Government Must Raise Investment In Healthcare Sector To 2.5-3% Of GDP, Says CII

Currently, India’s healthcare spending is at 1.29 per cent of GDP

Budget 2021: The COVID-19 pandemic has exposed the fallibility of the health infrastructure in the country and has served as a reminder that currently, India’s healthcare spending is at 1.29 per cent of the gross domestic product (GDP). This is much lower as compared to peer nations in the OECD and BRICS countries. According to the industry body, Confederation of Indian Industry (CII), the government must increase its investment in health, to at least 2.5-3 per cent of GDP by the year 2025 to ensure affordable healthcare. 

Healthcare needs to be accompanied by digital infrastructural support such as data storage, management, processing, and security systems. In order to build a robust technology framework for healthcare, the government must consider creating the ‘Medical Innovation Fund’ for supporting companies with the capital to promote digital healthcare infrastructure. Similarly, firms should be incentivized to undertake research and development in healthcare technology and local manufacturing of ICT devices that have applications in the field of medicine.

Since digital healthcare processes and planning are being brought under the National Digital Health Mission, equipping various points of contact with relevant IT hardware is critical. Access to funds to support such digital acquisitions at a cheaper rate would be critical for the private healthcare sector, including but not limited to hospitals, clinics, laboratories.

According to CII, Dedicated Special Economic Zones (SEZs) for establishing the data storage infrastructure with the required access to ancillary and network infrastructure facilities must be developed. This will contribute towards reducing operational costs for data center operators, enhance ease of doing business while attracting investments.

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Both central and state governments should release dues to the health sector under various schemes such as Central Government Health Scheme (CGHC), Ex-Servicemen Contributory Health Scheme (ECHS), state schemes etc urgently as it puts a strain on the working capital requirements of the private hospitals and impacts viability and profitability. A one-time, accelerated budgetary allocation could be considered for clearing the past dues under CGHS, ECHS, state schemes etc.

”The government has restricted its budget allocation for the health sector between 1.2 per cent to 1.6 per cent of the GDP in the previous decade (2010-20). To counter the pandemic’s effects, the Government will need stretch to its bottom dollar. The Government should also seek to increase the monetary allocations under the PLI Scheme to attract investments, provide faster single-window approvals, reduce/exempt duty on import of inputs and parts of medical devices, and rationalise GST rates on parts used in manufacturing of medical equipment,” said Sidharrth Shankar, Partner, J Sagar Associates.



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