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Mumbai: The Union budget for fiscal 2011 has done little to attract investment in healthcare or improve the access and affordability of modern health services, key private healthcare providers and consultancies say.

India’s health industry, now increasingly dependent on the private sector, is unable to provide modern health facilities to more than 60% of the country’s population, according to industry estimates.

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Its current capacity is 860 beds for every 1 million people. This will need to grow almost five times before the country can match the World Health Organization’s norm of 3,960 beds for one million people.

Recent studies by consultants Ernst and Young and KPMG say India needs to add 100,000 beds every year for the next two decades—at an annual cost of Rs50,000 crore—to meet its healthcare needs.

Madhu Kapparath/Mint

The healthcare industry had recommended immediate policy reformation and a move towards a combined public and private healthcare spending equal to 7% of gross domestic product (GDP) over the next three years, up from the current 4.5%.

Although the Budget raised the plan allocation for the ministry of health and family welfare by 14% to Rs22,300 crore from the current year’s Rs19,534 crore, the industry says this is simply not sufficient.

“In a Budget that provides 46% of plan allocation for infrastructure, not finding healthcare on the agenda of the finance minister takes another year away in brindging (the) affordability and accessibility gap in the sector," said Vishal Bali, chief executive of Fortis Hospitals Ltd.

Jayant Singh, industry manager, medical devices and diagnostics, South Asia and West Asia, with consultant and corporate advisor Frost and Sullivan, agreed with Bali.

“In terms of increase in allocation towards healthcare, it (the Budget) has not lived up to expectations. This was much required considering India has one of lowest government spendings on healthcare when compared to other economies," he said.

Hitesh Sharma, partner and national leader, life sciences practice, Ernst and Young, said increased allocation for the ministry was a boost to primary healthcare and infrastructure. But the much-anticipated extension and rationalization of a tax holiday for hospitals had not come through.

The Budget announced an annual health survey that will create health profiles of all districts, and the abolition of import duty on specified inputs for manufacture of orthopaedic implants.

Singh of Frost and Sullivan said the annual health survey may not have a direct impact on the healthcare industry. However, it may help in designing a universal health insurance scheme which could be customized on the basis of district health profiles, he added.

District profiling will place health authorities in a better position to prioritize funding based on variations in disease patterns across regions. It will also help healthcare deliverers, medical technology and pharma companies prioritize their products and services keeping regional variations in mind.

Bali said the rural health survey, under the National Rural Health Mission scheme, and wider health insurance coverage through Rashtriya Swasthya Bima Yojana (National Health Insurance Scheme) were innovative steps to increase healthcare cover for Indian villages.

But it was ironical, he said, that even though the Budget provided investment-linked deductions to the tourism sector, it did not offer any impetus for investments to set up new hospitals.

“Healthcare in India has major challenges in combating three diseases—heart disease, diabetes and cancer—that plague the population," said Pratap C. Reddy, chairman, Apollo Hospitals.

“It would have been helpful if the government had shown encouragement by enabling an investment-friendly environment for this sector, as our other significant challenges include severe shortage of health infrastructure and health human resources," he said.

Reddy also slammed the expansion of the service tax net to include health check-ups undertaken by hospitals for employees of business entities, and for health service provided under health insurance schemes offered by insurance companies.

“(This) may not be advantageous in ensuring better access to healthcare for the common man, besides being a deterrent for the advocacy of preventive health," he said.

The healthcare industry had recommended that the sector be given as much importance as roads, ports, highways, airports and information technology, as massive investment is required to raise the quality of healthcare in India.

V Raja, president & chief executive, GE Healthcare South Asia, praised the Budget for its overall balance, but added that it should have granted infrastructure status to the healthcare industry.

“This would have helped (the) healthcare industry have access to more funds, more benefits and thus resulted in increased and affordable healthcare to the masses," he said.

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