Not a single taker for Rs 50,000 crore scheme to set up hospitals in non-metro areas

Representational image.

Not a single hospital has come up under a Rs 50,000-crore loan guarantee scheme started by the Centre in 2021 to help set up private hospitals or upgrade units in non-metro cities and towns despite two extensions.

Just about 7 percent of the sum has been allocated to two private entities under the Loan Guarantee Scheme for COVID-affected Sectors (LGSCAS) so far. The scheme, which was to have originally expired in March this year, was first extended for six months and then given another extension.

Sources say even the allocated sum under the scheme is yet to be utilised.

Under LGSCAS, scheduled commercial banks (SCBs) were allowed to provide credit, with interest rate capped at 7.95 per cent per annum, for projects in the healthcare sector. A maximum of Rs 100 crore per project eligible for disbursal.

The loan guarantee scheme was first announced as part of a Rs 6.29-lakh crore stimulus package by finance minister Nirmala Sitharaman in early 2021 and approved by the Union Cabinet in June that year.

It was applicable for all loans sanctioned up to March 31, 2022, or till an amount of Rs 50,000 crore was sanctioned, whichever was earlier.

The loans could be given for setting up, modernising or upgrading hospitals, clinics, dispensaries, medical colleges, pathology labs and diagnostics centres, or for upgrading facilities for manufacturing vaccines and oxygen plants, and to install crucial apparatus such as ventilators and other priority medical devices.

They were specifically meant for projects across India, except in eight metropolitan cities—Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata, Mumbai and Pune.

The coverage provided by the National Credit Guarantee Trustee Co Ltd was to cover up to 75 per cent in greenfield projects and 50 percent in brownfield projects.

‘No appetite’

Speaking at an event organised by the Federation of Indian Chambers of Commerce and Industry (Ficci) on healthcare recently, Dr V K Paul, member (health), Niti Aayog, had expressed disappointment that the private sector had ‘no appetite’ for the scheme.

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A similar sentiment was reflected by a senior official in the Union health ministry, who said that the government’s push for private hospitals in cities and towns beyond metros, especially aspiration districts, has not borne much fruit yet.

Low rates, no publicity

Dr Thomas Alexander, president of the Association of Healthcare Providers of India, a network of private hospitals said that low rates under the two key government healthcare schemes- Central Group Health Scheme (CGHS) and Ayushman Bharat Pradhan Mantri Jan Aarogya Yojana - had made the functioning of private hospitals financially unviable.

“Even existing hospitals are struggling at present. So there is no question of new hospitals coming up in a big way in tier 2 and 3 cities,” he said.

Girdhar J Gyani, director-general of the association, said that coupled with the stress in the private healthcare sector, the fact that the government has not publicised the scheme at all, has also not helped.

“Not many people are even aware about the scheme—and the only hospital chains which are setting up centres beyond metros are mainly those with some foreign financial backing,” he said.

Dr Vivek Desai, a senior member of the industry body NATHEALTH, also said that the scheme is not doing well as it has not been marketed well among the industry.

“Also the details do not give much about the eligibility criteria,” he said. Tier 3 and towns below are usually not on the radar of hospital or diagnostic chains and hence their interest would be low, he said.

Local entrepreneurs who are not well connected will not know about the scheme at all, Desai, who is managing director of HOSMAC India, a hospital designing, planning and management consultancy, added.

‘Need flexibility’

Dr Dharminder Nagar, managing director of Paras Healthcare, a group that runs several super-speciality hospitals in north India, pointed out that the Centre’s COVID-19 scheme, under which smaller companies were offered loans of Rs 10-15 crore at a lower interest rate, had been very successful.

“But for larger groups, the amount being offered under LGCSAS is not enough to opt for this scheme,” he said.

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Nagar also added that in order to make any scheme on healthcare successful, the government should consider it more like an infrastructure investment, with a long gestation period, and allow flexible and stretched repayment period of 10-12 years.

Also, he said, there should be interest subvention for the initial five years and there should be lower security or government guarantee for investment up to Rs 100 crore.