Goaltide Daily News 2021
The law of sedition is unconstitutional
In India, forest rights means forest conservation
More can be done: For GoI’s economic package to make a difference, demand needs a fiscal stimulus
Booster dose: Govt unveils Rs 6.3-trillion package to spur growth
Union Finance Minister Nirmala Sitharaman on Monday announced the much-awaited fiscal package to revive the economy ravaged by the second pandemic wave, keeping the fiscal outgo limited for the current year.
The Rs 6.28-trillion package included a new credit guarantee scheme for health, tourism and micro borrowers, besides expanding the Emergency Credit Line Guarantee Scheme (ECLGS) by half to Rs 4.5 trillion and extending the Aatmanirbhar Bharat Rozgar Yojana.
“Measures announced by the FM will enhance public health facilities, especially in under-served areas, boost private investment in medical infrastructure and augment critical human resources. Special focus is on strengthening healthcare facilities for our children,” Prime Minister Narendra Modi tweeted.
The new announcements include extending credit guarantees of Rs 2.6 trillion and schemes worth Rs 2.4 trillion, spread over the next two to four years.
Economists estimate the fiscal outgo for fresh announcements in the current financial year at around Rs 60,000 crore, excluding the credit guarantee schemes.
An additional allocation of Rs 2.32 trillion has been made to develop health facilities for children.
“There are eight such measures being announced as relief. Of those, four are absolutely new. One is specific to health infrastructure and others pertain to growth in general, exports and employees … We also want to revive tourism to survive the second Covid-19 wave,” Sitharaman said.
The government announced Rs 1.1-trillion loan guarantees for pandemic-affected sectors. Of that Rs 50,000 crore will be for scaling up medical infrastructure in non-metropolitan cities.
The scheme will provide loans up to Rs 100 crore for three years with interest capped at 7.95 per cent. Guarantee coverage on such loans extended would be 50 per cent for expanding existing facilities and 75 per cent for new projects.
“There are no quantitative targets for health infrastructure. It will be demand-based to cover underserved areas to be decided by the private health care providers and banks, and where the need is felt,” said Finance Secretary T V Somanathan.
The remaining Rs 60,000 crore under the scheme has been earmarked for credit guarantees for other sectors, including travel and tourism, with interest capped at 8.25 per cent.
In order to support the rural economy and demand, the government has announced another credit guarantee scheme to finance loans through microfinance institutions (MFIs). The government will provide guarantees to scheduled commercial banks for loans to new or existing MFIs on lending up to Rs 1.25 lakh to about 2.5 million small borrowers. The interest rate under the scheme will be capped at the marginal cost of funds based lending rate (MCLR) plus 2 per cent.
“They can borrow for any of the purposes they want to,” said Sitharaman.
“All kinds of stressed accounts can benefit from it; that’s why we have mentioned defaulters. If the default is only for 89 days, they also get covered,” said Sitharaman.
The scheme will be available till March 31, 2022, or until Rs 7,500 crore worth guarantees get exhausted, whichever is earlier.
“By creating this window (MFI) we are encouraging banks to lend to people who need working capital to start operations. It also ensures that they get credit at a low cost. We are also ensuring that there is adequate liquidity available through various financial institutions. It is overall a measure to ensure that money comes to small and large enterprises,” said Debasish Panda, secretary, Department of Financial Services (DFS).
Besides these two credit guarantee schemes, the government has expanded the scope of the ECLGS, providing an additional Rs 1.5 trillion from the earlier Rs 3 trillion announced last year. So far, Rs 2.73 trillion has been sanctioned to 11 million enterprises under the scheme.
With experts warning of the impact of the likely third wave on children, the government allocated an additional Rs 23,220 crore, focusing on children and pediatric care. The additional allocation will focus on increasing the availability of ICU beds, oxygen supplies at central district and sub districts, ambulance services, medicines and tele-consultation with a primary focus on children.
Rs 50,000-cr loan guarantee for health not enough in non-metros
The Rs 50,000-crore loan guarantee scheme announced by the government on Monday is not enough to trigger health sector investments in non-metro cities even though it would help smaller players bridge the gap in building facilities in tier II and III towns, experts have said.
Finance Minister Nirmala Sitharaman said the government would provide 75 per cent coverage for new projects and 50 per cent for those in expansion mode in the non-metros. A maximum loan of up to Rs 100 crore would be given for up to three years at the interest rate capped at 7.95 per cent.
“The scheme could greatly benefit smaller entities that form the majority of the private health care sector to access funding to create enhanced capacities and capabilities,” said Dilip Jose, managing and chief executive of Manipal hospitals. Gurpreet Sandhu, President, Council for Healthcare & Pharma, called the package a sign of the government’s commitment towards improving the battered state of affairs in the health care sector.
“India’s Covid-19 catastrophe was a result of years of neglecting its public health care structure and a substantial investment to ameliorate the infrastructure is of utmost importance now.”
While the smaller players are likely to benefit from the loan guarantee scheme, some in the medical industry said no private hospital is keen on tier II and III cities as there is no availability of doctors. “The government has to think of ways to create a pool of qualified doctors. Unless there is the availability of medical personnel, no hospital would work,” said Girdhar Gyani, director general, Association of Healthcare Providers.
The announcement has also triggered criticism with the industry players saying the medical procedure rates under the Ayushman Bharat scheme are not viable. “The Centre does not know what the actual cost to deliver a particular medical procedure is. The rates are fixed ad hoc,” Gyani said.The medical fraternity has pointed out that third-party payment systems such as the Ayushman Bharat scheme are important in the present context. “If the government says it will allocate their Ayushman Bharat patients in that district to this hospital, then it becomes viable. There also has to be a clear catchment area – like police station zones. All patients in that catchment are allotted to one particular hospital; this will ensure footfall,” said Alok Roy, chairman, Medica Hospitals. The industry has appreciated the government’s allocation of Rs 23,220 crore with a primary focus on children and paediatric care, especially in the backdrop of the preparations to manage the third wave. The FM has said this fund would be used in this financial year itself.
“With the predictions of an even more destructive third wave, these policy stimuli would give some momentum to health facilities and infrastructure in the immediate term too,” said Ashok Patel, CEO & Founder, Max Ventilator.
The additional allocation would finance equipment, medicines, access to teleconsultation, ambulance services, ramping up human resource capabilities. Besides child care, these funds would be used for ramping up testing capacity and supportive diagnostics and to strengthen capacity for surveillance and genome sequencing.
needs to be done to make up for the neglect of the sector over the past several decades. “There can be no better time than the present, to fulfil the long-pending demand of the sector to be accorded infrastructure status, in both letter and spirit, to enable the nation to frog leap to the next level of health care,” said Harsh Mahajan, president, NATHEALTH. Mahajan said the loans should be provided readily to the private sector for upgrading infrastructure and building new ones, at very low-interest rates, preferably zero. “... As the return on investment in this sector is very slow and low.”