In our opinion steps like incentives, besides tax savings, for people buying health insurance and allocation of resources for public private partnership to increase health insurance penetration will be a positive move for the sector.
Insurance business is a capital-intensive business. The industry needs capital inflow on regular basis for its operational needs. Foreign direct investment and capital market are two major sources of capital in any industry.
Many insurance companies would like to invite foreign partners to raise their stake. At the same time, raising the cap to 49% will provide enough incentive to foreign companies to invest in Indian insurance sector. This will create required capital in the industry and help the sector expand much faster.
India's march in the field of healthcare has been relentless and in the past decade we have established ourselves as a world leader on quality healthcare. Raising healthcare expenditure as a sizeable portion of the Gross Domestic Product will further aid development of the sector.
In order to realize the dream of affordable and accessible healthcare to all at a time when the disease burden is burgeoning in the country the immediate need of the hour is to accord infrastructure status to the sector for improving investment activity.
Infrastructure status to hospitals would entitle them to tax exemption on their entire profit for 10 consecutive years, beginning with the initial assessment year in any 15-year period starting from the date of operation of a new hospital facility anywhere in India. This saving could be ploughed back to expand hospital beds, which would lead to better healthcare.
Imposition of service tax on preventive health check-ups is another area that needs to be looked into. With the incidence of lifestyle diseases, such as diabetes and cardio-vascular ailments rising rapidly in the country, preventive checks can provide timely intervention and save precious lives.
There is, therefore, a need to encourage such preventive check-ups instead of putting them under the tax net.
