Budget pleases pvt players, irks consumer activists

EHM News Bureau - Mumbai

Richard Feacham, executive director, the US-based Global Fund for fighting against Aids, TB and Malaria, is unhappy with the Budget 2003. So is Dr Arun Bal, eminent surgeon and founder member of Association for Consumer Actions on Safety and Health (ACASH). They feel that the FM has cut down the Budget on healthcare, let alone maintain or increase it. Says Mr Feacham, “Even inflation has not been taken into account. Government spend on healthcare is meagre and it needs to increase its allocation.” Dr Bal agrees. “While the WHO standard states a country needs to invest five per cent of its GDP in healthcare, we still invest 1.2 per cent, as against 14.4 per cent of the US and seven per cent of the UK,” he says.

Private players of course are ecstatic. Financial institutions have been encouraged to fund hospital projects by making their income (derived by way of dividends interest or long term capital gains from investment made in shares or debentures by way of long term finance) tax free. This benefit is being extended to capital extended to hospitals with 100 beds or more, which will lower the interest rates on the term loans to those hospitals up to 2 per cent. Dr Prathap Reddy, chairman, Apollo Hospitals sees this move as an inspiration for FDI in coming years.

Dr Bal however questions the need for more number of hospitals, and adds, “What we really need is to better the infrastructure of the public hospitals. But the budget has given no allocation of increase of funds for the public sector. The outlay for public sector needs to be increased. The budget has tried to promote the private healthcare at the cost of public sector.”

Building more hospitals is also being viewed by some as laying emphasis on curative healthcare and neglecting preventive care. M Damodaran, chairman and MD, UTI while speaking at SIES College of Management Studies said, ”Budget has ignored preventive care which needs focus with rise in non-communicable diseases.”

On the medical equipment front, there is good news for hospitals wanting to invest in state-of-the-art equipment. Duty structures on medical equipment, spares and consumables are currently as high as 40 to 60 pc and nearly 50 pc of project cost going into medical equipment, this significantly increases costs for healthcare projects.

There is reduction in customs duty on specified life saving equipment from 25 per cent to 5 per cent, and the exemption from CVD is expected to bring down the cost of investing in technology and medical infrastructure. Increase in the rate of depreciation from the present 25 per cent to 40 per cent is seen as an added benefit. Community insurance scheme is another step lauded by private players but NGOs have come down strongly on them. Ravi Duggal, coordinator, Centre for Enquiry into Health and Allied Themes, says that only a social insurance plan, which has universal coverage, will work. Questioning the viability of the scheme, he asks, “While the FM has offered a subsidy of Rs 100 to below poverty line households, who will pay the balance of Rs 265 from amongst the poor?”