1. post-budget
Ways to better
healthcare delivery
Healthcare has played an important role in leading the Indian economy to a high GDP growth
rate of 9 per cent per annum. However, the Indian Government needs to implement certain
measures to improve healthcare delivery and ensure inclusive development. This article elaborates
on the different kinds of fiscal reforms that could be implemented in order to give the healthcare
industry an impetus.
I
ndia’s preliminary health risk (based on body While increased healthcare expenditures need not
mass index [BMI], smoking, tobacco and alcohol necessarily result in better health outcomes, fiscal policies
consumption and genetic biomarkers for Indian and measures would strengthen the government’s ability
Kapil Khandelwal phenotypes) shows that in the next 5 to 10 years, a to enable the creation of social infrastructure through
is an independent large proportion of the risks will be concentrated on the alternative models.
board member of sections A, B and C segments of urban and semi-urban
various companies India that contribute largely to the personal income Infrastructure development
and founding tax kitty of India. While the spread of risks may not Healthcare infrastructure development has a long
board member be uniform across various states, the issues would need gestation and longer break-even. Some of the areas for
of Disease to be addressed fiscally to ensure that the health and policy measures include:
Management well-being of India does not negatively impact India’s Tax holidays for establishing new healthcare
Association of potential future growth. infrastructure and upgradation of the existing
India (DMAI). The Budget ‘coalition politics’ is evidently behind us. infrastructure
He is one of the However, to accelerate and address future health risks Creation of health zoning based on population health
thought leaders & issues related to population health management, risks to create infrastructure that can create checks
in healthcare India needs a different coalition of proponents across and balances in the overall healthcare system and
and life sciences the healthcare & life sciences value chain. These could reduce overcrowding in urban hospitals
IT in Asia Pacific be bound by cohesive fiscal stimulus & policies that the Investments in health informatics and information
and Emerging Union Budget ‘hit and missed’ as far as fiscal stimulus and communication and technology (ICT) through
Markets. reforms in the Indian healthcare sector are concerned. vertical applications on similar lines of the unique
24 M O D E R N M E D I C A R E Au g u s t 2 0 0 9

2. post-budget
national id programmes and health informatics need Deduction for preventive health: The IT Act should
to be budgeted address this in a small but effective manner by
Governance models for health infrastructure unique allowing at least a token deduction of Rs 2,500 per
to the state health risks and requirements family per annum for preventive check ups including
Incentives for quality and accreditation of health cancer check ups under Chapter VI of the Act
systems to create consumer confidence Increasing the limit for medical expenses deduction: In
order to enable employees to avail quality healthcare
Human resources capacity creation services the limit prescribed under section 17(2) of the
Education and vocational education had been the Income tax Act for medical treatment should be raised
thrust of the current Budget. Some of the measures that to Rs 50,000. In addition, the prescribed diseases and
need focus on healthcare include: ailments that are covered under the Income Tax Act
Encourage investments in healthcare capacity building need to be revised and the hospitals recognised by the
for providing healthcare education & training through government need to be expanded
PPP models and corporatisation of the health
education sector Innovation and research
Encourage international partnerships to establish About 90 per cent of the equipment is being
commercially managed academic medical research currently imported. Hence, a greater thrust is required
centres like the University Health Systems in the West. on innovation & research for import substitution of
Some of the MCI norms for such institutions need to medical equipment, devices and consumables. While
be revisited and revised China and other emerging Asian countries are one of
Regulation and investments in skill building and the biggest threats to the sector, certain measures need
accreditation of existing health workforce in India. to be taken to protect and encourage growth of the
Encourage the use of ICT for virtual campus and domestic industry. One could be that fiscal incentives be
international linkages and exchange programmes introduced to help develop India as a base for medical
equipment manufacturing. R&D could be given an
Infrastructure funding and insurance impetus if benefits under Section 35 (2AB) would be
With over 80 per cent healthcare spending being extended to hospitals & medical centres engaged in
out-of-pocket, there is a need to make this cost more in-house & collaborative/outsourced medical research
affordable. Health insurance penetration in India is with/to medical colleges, centres for advanced medical
significantly low and the bulk of India’s population is research for 10 years.
still young. Policies that enable healthcare financing and
savings can lead to better health financing in the future.
The current global slowdown has several lessons for
healthcare financing and insurance:
Creation of a health development fund that will be
matching investments made by funds and financial
institutions in this sector
Healthcare investment allowance: The healthcare
service sector needs a fillip in the form of a specific
allowance akin to the investment allowance under
Section 32A of the Income Tax Act 1961
A healthcare upgradation and new investment fund
(on the lines of Textile Upgradation Fund Scheme of
the Ministry of Textiles) to be set up giving interest
subsidy of 500 basis points for approved investments
for upgradation or creation of new capacity in the
healthcare sector
Encourage healthcare real estate investment trusts
(HREIT) (on the lines of the newly approved real
estate investment trusts). Globally, HREIT has become
an important funding channel to smoothen the
investment in land and building ( This map is only for
representational purpose)
Incentivise consumer health and wellness spending by
Population health risk assessment map of India
bringing these under the tax-saving bracket
Au g u s t 2 0 0 9 M O D E R N M E D I C A R E 25

3. post-budget
Health status Healthy Vulnerable Affected Sick Sick Sick Comments/observation
proponent (acute) (chronic) (terminal)
Individual tax Savings in tax offset
payer medical cost inflation
Employer FBT and transfer of
healthcare financing to
employees
Health Directed towards BPL.
insurance Reforms in health
insurance silent
Health services Health services taxed.
provider Divestment of hospitals
Devices and Duties reduced on certain
pharmaceuticals input/raw materials
Life sciences Tax holidays and impact of
and R&D duties reduction
Others Increased government
expenditure on education, etc
Summary of the impact of the Union Budget 2009
Conclusion population health outcomes within the current tenure
Unlike the healthcare and pharma industry where of the government’s five-year term. These could
innovations take over 12 to 15 years to reach the mitigate some of the population health risks that
final consumer and impact health outcomes, these would erode the global competitiveness of India due to
innovative fiscal stimulus, measures and policies if poor health and wellness in the times to come.
implemented, could have a positive impact on the (mmedit@infomedia18.in)
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