As per a study by an industry body and Ernst & Young, India would require another 1.75 million beds by the end of 2025. The public sector however is likely to contribute only around 15-20 per cent of the required US$ 86 billion investment

The Indian healthcare sector is expected reach US$ 280 billion by 2020, according to a report by an industry body. “Healthcare  is  believed to be the next big thing after IT and predicted to become a US$ 280 billion industry by 2020,” the report said.During the 1990s, Indian healthcare grew at a compound annual rate of 16%. Today the total value of the sector is more than $34 billion. This translates to $34 per capita, or roughly 6% of GDP. By 2012, India’s healthcare sector is projected togrow to nearly $40 billion.

The Rural Health Survey Report 2009, released by the Ministry of Health, stated that during the last five years rural health sector has been added with around 15,000 health sub-centres and 28,000 nurses and midwives. The report further stated that the number of primary health centres have increased by 84 per cent, taking the number to 20,107.

Some  of the Key Drivers To this Growth

1)One driver of growth in the healthcare sector is India’s booming population, currently 1.1 billion and increasing at a 2% annual rate. By 2030, India is expected to surpass China as the world’s most populous nation. By 2050, the population is projected to reach 1.6 billion.

2) India’s thriving economy is driving urbanization and creating an expanding middle class, with more disposable income to spend on healthcare. While per capita income was $620 in 2005, over 150 million Indians have annual incomes of more than $1,000, and many who work in the business services sector earn as much as $20,000 a year. While this
is a fraction of the income that their US peers earn, it is the equivalent of more than $100,000 per year when adjusted for purchasing power parity.

3) Healthcare Initiative by the  private sector accounts for more than 80% of total healthcare spending in India. Unless there is a decline in the combined federal and state government deficit, which currently stands at roughly 9%, the opportunity for significantly higher public health spending will be limited.

4) Rise of Lifestyle Diseases:Over the next 5-10 years, lifestyle diseases are expected to grow at a faster rate than infectious diseases in India, and to result in an increase in cost per treatment. Wellness programs targeted at the workplace, wheremany sedentary jobs are contributing to an erosion of employees’ health  is bound to effect ” Employees, Employers, ( Companies and well as result in losss  of Productivity

Finance minister Pranab Mukherjee proposed amendments in service tax and extended it more areas. Earlier, 117 segments were under service tax, now the unchanged rate of 10% tax on services will be levied on 320 more which is amajor concern for the hospitals coming up in the country.

But   sources indicate that  healthcare service providers today asked the government to roll back the proposed service tax on treatment in private hospitals and tests in diagnostics labs, saying the move will only burden the common man.  Apart from the service tax on hospitals and diagnostics centres, the Union Budget for 2011-12 has also raised excise duty on medicines and medical equipment from 4 to 5 per cent which could pave the way for medicine price increases.

Earlier Healthcare  Companies termed the amendment as ambiguous, impractical and illogical’ by experts in the healthcare industry as it will make healthcare all the more costlier than it is today.

As per amendments in the budget, service tax has been widened to cover some categories of hospitals and diagnostic tests. AC hospitals with more than 25 beds have been brought under the ambit of service tax. Healthcare industry experts have termed this as an ‘improper’ step.

As a consequence of service tax — cost of healthcare will go up thereby adversely affecting common man and given the unorganised nature of the industry.

Finance Minister Pranab Mukherjee , in his budgetary proposals, has imposed 5 per cent service tax on treatment in private hospitals, paid either by individuals, insurance companies or firms. The same levy would be applicable to diagnostic tests of all kinds. This will however not be applicable to government hospitals.

Source : Economictimes

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