Historically, Governments have given no incentives to entrepreneurs for setting up hospitals in rural areas. Whether city or village, the construction and running costs of a hospital are largely the same, and so is GST on medical equipment. However, the affordability factor of an urban patient is several magnitudes higher compared to rural patients. It therefore makes far more sense for a healthcare entrepreneur to build hospitals in cities rather than rural areas. It is a sad situation – while Government healthcare facilities are non-existent in rural areas, there are no incentives to build private hospitals either. Consequently, rural people are forced to live without healthcare services. Do their lives have no value?
To address this issue, the upcoming Budget needs to offer incentives to encourage and empower healthcare entrepreneurs to build hospitals in rural areas. Three steps can be taken: a 10-year tax holiday for new hospitals in villages and rural areas; accelerated depreciation (100% in the first year itself); and zero GST for life-saving medical equipment used in setting up rural hospitals.
This will ensure that growth of healthcare facilities is not focused on cities alone, but also spreads to hinterland India. Once the regulatory ecosystem favours setting up hospitals in rural areas, the challenge of healthcare access can be successfully met.
The author is chairman of Meenakshi Mission Hospital & Research Centre, Madurai, Tamil Nadu
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