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Roll back service tax on AC hospitals: FICCI

Expressing disappointment over the proposal to levy five percent service tax on treatment at air-conditioned private hospitals, a leading industry lobby has asked Finance Minister Pranab Mukherjee to roll it back and extend infrastructure status to the healthcare sector.

business Updated: Mar 06, 2011 09:38 IST

Expressing disappointment over the proposal to levy five percent service tax on treatment at air-conditioned private hospitals, a leading industry lobby has asked Finance Minister Pranab Mukherjee to roll it back and extend infrastructure status to the healthcare sector.

The Federation of Indian Chambers of Commerce and Industry (FICCI) has contended that the proposal will impact the quality and safety measures, as today air-conditioning is an essential need and not a luxury in any hospital.

The budget has proposed the normal service tax on health checks in hospitals with air-conditioning and more than 25 beds, which will lead to patients ending up paying much more than earlier.

This is also substantiated by the National Accreditation Board for Hospitals which do not accredit hospitals without central air-conditioning in their facilities as split or window air-conditioning increases the risk of infection in the hospital.

FICCI also said that reduction in overall funding for national health programmes along with increase in diagnostic costs will deter the already negligible effort on preventive healthcare and further increase the burden on secondary and tertiary treatments.

According to a World Health Organisation report (2005), if healthcare issues are not addressed holistically, losses on account of health issues would amount to five percent of the gross domestic product (GDP), or a whopping Rs 61 trillion ($1.3 trillion) by 2015.

The report also added that the 20% increase in current allocation for health is misleading, as nearly 80% of the health expenditure is financed out of pocket.

Most rural patients come to the tertiary care hospitals in the cities for treatment by mortgaging their personal assets. Any increase in healthcare costs for hospitals would be passed on to patients, pushing them to the brink.

According to FICCI, India today is in dire need to expand its healthcare infrastructure which is extremely inadequate. Beds per every 1,000 people in the country is low at 0.9 when compared to the global average of 2.7, or 3.0 in China and 2.4 in Brazil.

To reach an average of 2 beds per 1,000 population, a realistic target set considering the current state of health infrastructure, India needs to add over 1.75 million beds with an estimated investment of $86 billion by 2025, it said.