Ahead of the 2025 Budget, it is essential to emphasize the critical need for enhanced investments in India’s healthcare infrastructure. Health is a fundamental necessity, and our ability to deliver equitable and quality care is pivotal for national progress. To meet global standards of three hospital beds per 1,000 population, India must significantly increase its budgetary allocation towards healthcare infrastructure. While the government’s efforts in developing world-class AIIMS facilities are commendable, similar attention must be directed towards state-led initiatives, particularly in the development and upgrading of district-level hospitals, which form the backbone of our healthcare system. The quality of these “bed assets” must be prioritized alongside their quantity.
Establishing a Healthcare Capex Fund
Building healthcare infrastructure is an expensive undertaking with costs often exceeding ₹1 crore per bed. However, returns on such investments are not commensurate when compared to other industries, creating challenges for private players to develop greenfield projects. To address this gap, the government should establish an earmarked Healthcare Capital Expenditure (Capex) Fund. This fund could provide loans with flexible repayment terms, such as extended tenures, lower interest rates, ballooning of interest payments based on capacity utilization, and longer moratorium periods. These measures would incentivize private sector participation, ensuring sustainable investments in healthcare infrastructure.
Rationalizing GST in Healthcare
Another critical area requiring attention is the financial burden posed by high customs duties on life-saving and high-cost diagnostic equipment. Lowering these duties would facilitate access to advanced medical technology, enabling better care delivery. Additionally, the Goods and Services Tax (GST) structure imposes a substantial burden on hospitals, as they cannot claim input tax credits due to the GST-exempt nature of healthcare services. Rationalizing GST on capex items specific to healthcare would provide much-needed relief. Alternatively, bringing healthcare services under the GST regime, even at a minimal 5% slab, would allow hospitals to offset GST expenses and reduce the financial strain on infrastructure development.
Addressing the human capital shortage
India also faces a significant shortfall in human capital within the healthcare sector, including doctors (especially super-specialists), nurses, paramedics, and technicians. Addressing this gap requires the creation of a robust educational infrastructure. The government could encourage private players to establish healthcare training institutions by offering tax holidays, subsidized loans, reduced electricity tariffs, and lower property taxes. These initiatives would ensure a steady pipeline of skilled professionals to support India’s growing healthcare needs.
Streamlining health insurance schemes
While the Ayushman Bharat scheme has established the government’s role as a “payor”, integrating other insurance schemes such as ESIC, ECHS for armed forces, CGHS, and various state-level programs into a unified framework could enhance efficiency and expand coverage. Consolidating these schemes under a single umbrella would also allow the government to optimize resources, ensuring premiums for the most vulnerable sections of society. Special provisions, such as additional benefits for ECHS beneficiaries, could be seamlessly incorporated into this framework.
Tax incentives for private Mediclaim insurance will increase penetration particularly in the middle class. This coupled with improvement in claim processing can help hospitals improve their financial health.
The 2025 Budget presents an opportunity to address key healthcare challenges, from infrastructure funding to human capital development, building a resilient system that ensures better outcomes for all.
About the author: Dr. Vivek Desai is the Founder & MD at HOSMAC.
Disclaimer: The views and opinions expressed in this article are those of the author only and do not necessarily represent the official policy or position of Healthcare Radius.
