Healthcare bodies press govt for fiscal and non fiscal interventions

Our Bureau, BengaluruFriday, March 27, 2020, 14:15 Hrs  [IST]

The healthcare industry, jointly represented by FICCI, AHPI, ASSOCHAM, Indian Chamber of Commerce, PhD Chamber of Commerce, PHANA Karnataka and NATHEALTH, has emphasised immediate need for fiscal and non-fiscal interventions from government required for the sector to deal with COVID-19 impact. The industry leaders recommended for hospitals, diagnostics, pathology labs, med tech, insurance, homecare and other healthcare service providers. “The services sector, which accounts for about 55% of India’s gross domestic product, is poised to be the worst hit due to actions such as mandatory and self-imposed curfew. The social distancing measures would lead to lower footfalls in the healthcare sector, the decline in elective procedure volume and sub-optimal operating efficiencies that will have a severe impact on the cash flows of companies in the capital intensive sector. The industry is also suffering from reduced availability & elevated pricing observed for certain essential consumable items,” the representation to the government pointed out. “Also, the global supply chains are in turmoil driving up shortages causing significant hike in the input costs which cannot be passed on to consumers as healthcare services are exempt from GST and many of the critical items are capped in prices. Apart from the healthcare facilities, medical devices, diagnostics and health insurance too have also been affected due to the supply-chain and demand disruptions,” it said. COVID-19 needs all health workers to be motivated and secured as a united front. Hospitals, nursing homes, diagnostic labs and homecare, need immediate fiscal intervention. Industry leaders strongly recommended the government to ensure working capital that would help the hospitals continue to operate at near-normal levels and both COVID-19 and non COVID-19 patients can avail the services. The industry called for six to nine months’ moratorium on all working capital, principal, interest payments on loans and overdrafts, bringing in liquidity and allowing for business continuity. Dubbing it as a critical fiscal intervention, the sector sought short-term interest-free loans for augmenting capacity, and to ensure smooth hospital operations without supply-chain disruptions. The government also was requested to examine grant or subsidy to as an interim market support mechanism. To maintain operational expenditure including payment of salaries to health professionals on time, it suggested cash flow to the government should immediately release 100 per cent Central and state government dues to the sector under various schemes such as CGHC, ECHS, state schemes, GIPSA among other. The representation also seeks urgent release of income tax refunds and to allow a quarter's postponement on compliances, payment of insurance without the policies getting lapsed. The healthcare leaders said that a waiver of GST on input costs and services for two quarters would help enormously. “This would also ensure that hospitals are not forced to curtail the outsource services like house keeping, security and F&B (all of which have significant GST levies), in turn causing loss of jobs people employed in those sectors. Deferment of pre-payment of loan for 12 months should be allowed. Deferment of advance tax payments at the Central government level would also be a significant fiscal intervention,” they said in the unified representation. For medical devices industry, the representation calls for cut down on custom duty across the board for life-saving medical equipment and set up a credit window facility that can help augment infrastructure during this period of great turmoil. It also suggested withdrawal of health cess ad valorem from medical devices so that the health cess will apply only to basic customs duty. For the medical device industry also the healthcare emphasised that Government should clear all outstanding and make timely payment for upcoming procurements from government Institutions in the current crisis, which will go a long way in supporting med-tech companies.