CII Suggests Govt to Elevate Healthcare Investment to 2.5 -3% of GDP

In the Pre-Budget Memorandum 2021-22, Confederation of Indian Industry (CII) has suggested the government to invest in health to at least 2.3 - 3 percent of GDP by the year 2025 to ensure affordable healthcare. However, the COVID-19 pandemic has exposed the shortcoming of the health infrastructure in the country and has served as a reminder that currently, India's healthcare spending at 1.29 percent of the gross domestic product (GDP) is much lower as compared to peer nations in the OECD and BRICS countries.

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 and enhance ease of doing business, while attracting investments.

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 and laboratories.
Both state and central 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.

Sidharrth Shankar, Partner, J Sagar Associates states, ''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 rationalize GST rates on parts used in manufacturing of medical equipment."