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Low Investment In Health Sector’s Private Domain; Stimulus Could Be Game-Changer: V K Paul

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Finance Minister Nirmala Sitharaman on Monday announced Rs 1.5 lakh crore of additional credit for small and medium businesses, more funds for the healthcare sector, loans to tourism agencies and guides, and waiver of visa fees for foreign tourists as part of a package to support the pandemic-hit economy.

Investment in the expansion of the health sector in private domain has been relatively low and the recent stimulus announced by the government provides the country an opportunity to change this situation, Niti Aayog Member (Health) V K Paul said on Tuesday.

Finance Minister Nirmala Sitharaman on Monday announced Rs 1.5 lakh crore of additional credit for small and medium businesses, more funds for the healthcare sector, loans to tourism agencies and guides, and waiver of visa fee for foreign tourists as part of a package to support the pandemic-hit economy. The government will also provide Rs 23,220 crore of additional funding for setting up children and paediatric care/beds at hospitals to prepare them for any emergency arising out of a possible third wave of COVID. ‘There has been relatively low investment in the expansion of the health sector in the private domain.The stimulus announced yesterday provides us an opportunity to change this situation,’ Paul said while releasing a report titled ‘Not-for-Profit Hospital Model in India’ . According to an official statement, the report provides insight into the operation model of not-for-profit hospitals. It presents research-based findings on such hospitals — categorized under ownership and premise of service — and makes subsequent comparisons with private hospitals and health schemes of the union government. According to the statement, while adequate information exists on for-profit healthcare providers and institutions, there is a dearth of reliable and structured information on their not-for-profit counterparts. ‘The not-for-profit hospital sector provides not only curative but also preventive healthcare,’ the statement said, adding that it links healthcare with social reform, community engagement, and education. The report proposes short-term and long-term policy interventions, such as developing criteria to identify these hospitals, ranking them through a performance index, and promoting top hospitals for practising philanthropy, among others. It also highlights the need to use the expertise of these hospitals in managing human resources with limited finance in remote areas.

(PTI) Originally published on 29th June 2021

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New Pandemic Package To Raise Fiscal Deficit By 60 Bps, Opens Rs 70,000-Cr New Loan Window: Report

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Assuming an equal distribution of the new announcement of Rs 1.10 lakh crore, with 50 per cent and 75 per cent guarantee cover and risk weight of 100 per cent, banks may have a capital relief of around Rs 7,500 crore that can further generate a credit of around Rs 70,000 crore

The latest credit push for the pandemic-hit sectors and other relief supports will have an additional 60 bps impact on the fiscal deficit, and can offer an additional liquidity window of Rs 70,000 crore to banks, says a report.

Finance minister Nirmala Sitharaman on Monday announced Rs 1.5 lakh crore of additional credit for small businesses, more funds for the healthcare sector, loans to tourism agencies and guides, and waiver of visa fees as part of a credit-led package to support the pandemic-hit economy.

The package is mostly made up of government guarantees to banks and microfinance institutions for loans they extend to the pandemic-hit sectors, totals up to Rs 6.29 lakh crore together with the previous such packages.

Assuming an equal distribution of the new announcement of Rs 1.10 lakh crore, with 50 per cent and 75 per cent guarantee cover and risk weight of 100 per cent, banks may have a capital relief of around Rs 7,500 crore that can further generate a credit of around Rs 70,000 crore, according to an SBI Research analysis.

The fiscal impact of the latest announcements and earlier is not linear as a substantial portion of the package is contingent liabilities. Ignoring these, the immediate impact will be slightly over Rs 1.23 lakh crore which will be around 0.6 per cent of the GDP, SBI chief economist Soumya Kanti Ghosh said in the report.

Monday’s announcement broadly emphasises four sectors – health, tourism, MFIs and agriculture. The other measures announced fine-tune the scope of the already existing arrangements, he said.

Under the credit guarantee schemes to further the flow of credit to the weaker sections of the society, guarantees will be provided to banks for loans to new or existing NBFC-MFIs or MFIs for lending up to Rs 1.25 lakh to around 25 lakh small borrowers. The interest rate on such loans will be capped at MCLR plus 2 per cent.

Though most of the latest announcements are part/extension of the past packages, overall, this is a timely relief to the sectors/segments that were impacted most by the second wave of the pandemic.

The Rs 50,000-crore guarantee cover package to boost the medical infrastructure in underserved areas across the 124 aspirational districts, can lead to the overall improvement in human development, the report said.

At present, as per the MSME website, 124 districts are recognised as aspirational districts. The maximum loan size under the scheme is kept at Rs 100 crore with an interest rate cap of 7.95 per cent and a guarantee duration of three years. 

(PTI) Originally published on 29th June 2012