India sets its sights on boosting the pandemic health infrastructure

India sets its sights on boosting the pandemic health infrastructure
A GoI initiative to inject massive funds into the healthcare system will act as a timely catalyst for an industry which has been ravaged and exposed by a second wave of the pandemic.Courtesy: ANI

$6.8 billion worth of credit incentives likely on offer as a timely catalyst for the industry and investors.

An Indian government plan to offer $6.8 billion worth of credit incentives to boost health care infrastructure across the nation will not only be a timely catalyst for the industry struggling in the wake of the coronavirus pandemic, but also help rejuvenate the healthcare system in tier 2 and tier 3 cities.

As a consequence, the bold move promises to open up further opportunities for investors in the healthcare segment, according to analysts.

The programme, reported by Bloomberg, will allow companies in India to access funds for ramping up hospital capacity or medical supplies with the government acting as a guarantor. The focus is likely to be on strengthening Covid-19 related health infrastructure in smaller towns, according to officials cited by the agency.

A growing middle-class, coupled with rising burden of new diseases, are boosting the demand for health insurance coverage. With increasing demand for affordable and quality healthcare, penetration of health insurance is poised to expand in the coming years.

Competitive advantage

With India's competitive advantage in its large pool of well-trained medical professionals, costs compared to its peers in Asia and Western countries and the vast market size, the healthcare industry has the potential to increase three-fold to $133.44 billion by 2022, according to the IMF/World Bank.

In Budget 2021, India’s public expenditure on healthcare stood at 1.2% as a percentage of the GDP.

A health worker wearing a protective suit attends a patient inside Covid-19 care centre. In FY21, gross written premiums in the health segment grew at 13.7% year on year to $8 billion.
A health worker wearing a protective suit attends a patient inside Covid-19 care centre. In FY21, gross written premiums in the health segment grew at 13.7% year on year to $8 billion.Courtesy: ANI

A growing middle-class, coupled with rising burden of new diseases, are boosting the demand for health insurance coverage. With increasing demand for affordable and quality healthcare, penetration of health insurance is poised to expand in the coming years. In FY21, gross written premiums in the health segment grew at 13.7% year on year to $8 billion. The health segment has a 29.5% share in the total gross written premiums earned in the country. In comparison, between April 2000 and December 2020, FDI inflows for drugs and pharmaceuticals sector stood at $17.74 billion, according to the data released by the Department for Promotion of Industry and Internal Trade (DPIIT).

Health worker arranges polio vaccine drop boxes during 'Polio Ravivar' after post-covid. The Reserve Bank of India had announced an on-tap liquidity window for banks worth Rs500 billion to extend credit to health services and vaccine manufacturers until March 2022.
Health worker arranges polio vaccine drop boxes during 'Polio Ravivar' after post-covid. The Reserve Bank of India had announced an on-tap liquidity window for banks worth Rs500 billion to extend credit to health services and vaccine manufacturers until March 2022.Courtesy: ANI

Loan guarantees

According to officials, the government's loan guarantees will complement the Indian central bank's efforts to boost credit for health care services and provide fresh lending to vaccine-makers. The Reserve Bank of India had announced an on-tap liquidity window for banks worth Rs500 billion to extend credit to health services and vaccine manufacturers until March 2022.

The government also last month separately announced including airlines and hospitals in a $41-billion emergency credit program to cushion them from the impact of the pandemic. That program guarantees loans worth 20 million rupees to hospitals and clinics to set up on-site oxygen generation plants, with interest rates capped at 7.5%.

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