Raise govt spend to 2% of GDP: Healthcare industry

Excerpts from India Business Hour on CNBC-TV18 Watch the full show » Nifty BSE | NSE 10/02/12 Are Mutual Funds betting on Nifty?

The insurance reform bill has found a new friend in the healthcare sector, which is lobbying for the bill to be passed. But that's not the only thing the healthcare sector wants from the budget. CNBC-TV18 Vineetha Athrey reports that the healthcare sector is also asking for improved infrastructure facilities. Here is a verbatim transcript of Vineetha Athrey's comments on CNBC-TV18. Also watch the accompanying video.

The healthcare industry is clear about what it wants from the budget. It's top priority: A quick passing of the insurance reform bill. It says raising the cap on FDI in the health insurance sector to 49% will give both the insurance and the healthcare sectors a big leg up. Experts add that this move will also help make healthcare cheaper.

Rana Mehta, Vice Pres - Healthcare, Technopak said, "Many global players will then come in and there will be some competition, which will increase the quality of service available. Also as it is a volume-based business, over a period of time, even costs will come down."

The other demand is the one that has been on the cards for a while now - infrastructure status for the industry. Expansion plans have been delayed due to expensive land, and a high tax structure. With infrastructure status, land will become cheaper. It will also mean that the tax holiday in tier 2 and tier 3 cities is extended from the current five years to ten years.

Vishal Bali, CEO, Wockhardt Hospitals said, "It takes a very long time for hospitals to break even. If hospitals take about three years to break even in metros, it takes about five to six years in tier 2 and 3 cities and in some places even longer. So you need a tax holiday of 10 yrs to be successful."

A demand for more outlay, of course, is a given. The industry wants the government to increase its spending on healthcare from 0.9 percent of GDP to at least 2%, along with the private sector's contribution of 5%. It also wants a higher outlay towards health insurance schemes to achieve universal insurance coverage.