Healthy Financial Relief Package for People’s Health

Financial Relief Package by Finance Ministry
Financial Relief Package by Finance Ministry


Last week, India’s Finance Minister announced a slew of financial relief to the stimulate growth and improve the healthcare infrastructure of the country which has been affected badly by the second wave of Covid. The package worth INR 0.62 million crores can be sub divided in three broad themes:

  1. Those that improve the financial liquidity through a guarantee. The impact will depend on how much money is borrowed through this route. The lower interest rate charged which can be 2-3% less than the normal rate will help to lower the cost of funds. It needs to be seen if such funds are taken for investment or for repaying old loans.
  2. Provide direct relief for the weaker sections which will benefit the recipients.
  3. Initiate medium terms reforms that will help farm productivity, exports, power sector and manufacturing.

This blog is about the healthcare sector relief measures announced and my comments and feedback on the announcement

My Analysis for Healthcare Sector Measures Announced

The presentation from the Finance Minister is in the link below. Here are the summary of the measures announced and the comments on the same:

Announcements engendering additional fiscal cost above the Budget FY22 numbers Comments/Remarks/Feedback
Additional spending on health : Total amount:  Rs 23,220 crs (of which Centre’s share is Rs 15,000 crs)The focus is on children and paediatric beds, increase ICU beds, oxygen supply, enhance testing facility among others Welcome policy measure
Additional Food grains (already announced) In the wake of the second wave of COVID- 19 pandemic and to ensure food security to vulnerable, 5 kg food grains to be provided from May – November 2021 Food security and nutrition to the vulernable section of the society will assist in health and well being and reduce susceptibility to Covid and other infections due to malnutrition
Free Tourist Visa for first 5 lakh travelers with a total cost of Rs 100 crs There could have been a Visa Fee waiver for the tourist visiting India for Medical Tourism
Additional outlay for broadband connectivity to each village under BharatNet PPP Model for expansion and upgradation in digit connectivity This will give a boost to the National Digital Health Mission and private sector digital health enterprises in India
The PLI scheme for Large Scale electronics manufacturing has been extended by 1 year till FY26 There should be an exclusion clause for the innovation based enterprises for health sciences which are developing products and technologies for replacing Chinese/imported products
Announcements engendering increase in contingent liabilities/ Announcements engendering increase in contingent liabilities/ capital infusion Comments/Remarks/Feedback
Loan Guarantee Scheme for COVID affected sectors aggregating Rs 1.1 lakh crs (Rs 50,000 crs for Health and Rs 60,000 crs for other sectors) Focus on guarantee cover for “expansion” and “new projects”Maximum loan amount of Rs 100 crs for a duration of 3 yearsInterest cap: 7.95% (For Health); 8.25% (For others)Guarantee cover: 50% (For expansion), 75% (For Others) This is part of the overall investment required by the healthcare sector to match the global norm of 3 beds per 1000 people. This is in the right direction. The new trend in healthcare infra post Covid is not to build the large hospitals but smaller units. Also where is the manpower to run these new facilities set up under this scheme?
Enhancement of the Emergency Credit Line Guarantee Scheme from Rs 3 lakh crs to Rs 4.5 lakh crs Positive for the healthcare operators who are cashflow strapped
Credit  guarantee  scheme  for  Micro  Finance  Institutions aggregating Rs 7,500 crs Guarantee to be provided to scheduled commercial banks for providing loan to MFIs for on-lendingMaximum tenure : 3 yearsInterest rate cap from loans from banks : MCLR + 2%Interest rate on loan from MFIs: 2% below maximum limit prescribed by RBI Positive for the healthcare MSMEs who are cashflow strapped
Financial support for Registered Tourist Guides Guarantee cover : 100%Limits: Rs 10 lakhs for agency and Rs 1 lakh for tourist guide There could be some investment for skill development for nursing assistants who accompany tourists during their convalesce period while tourism What about the airline sector which is suffering and not been able to provide connectivity as before Covid

New Streamlined Public Private Partnership (PPP) Policy

Recognizing the current process for approval of Public-Private Partnership (PPP) as long and cumbersome, the centre has announced the formulation of a new policy for appraisal and approval of PPP proposals and monetization of core infrastructure assets. This will help speedy clearance of projects. As I have been writing, PPP in healthcare has not taken off ever since I was on the Planning Commission’s PPP in Healthcare Regulatory Committee. These issues have to be ironed out as Government after Government have tired to draft policies for assisting PPP in healthcare sector, but there is not enough private sector enthusiasm and participation at a large scale to make PPP in healthcare a thumping success. Let’s wait for the fine print of the PPP policy that will come out.


The Finance Minister has forgotten that there is dire shortage of skilled front line medical workers. With the Covid pandemic, many youths are not forthcoming to join the healthcare sector. Measure could have been announced to make the healthcare sector more attractive for the youth of India to join. It looks like the stock markets have not give a warm response to these measure announced by the Finance Ministry and is running on its own steam.

Disclaimers: We have not used our proprietary algorithms for this blog

By Kapil Khandelwal KK

Popularly known as Father of ‘Quant Offshore Hedge Fund Investing’ in India amongst the Hedge Fund Managers in India and abroad, Kapil has earned recognition to be amongst the few handful Indians approved by the United Kingdom’s Financial Conduct Authority (FCA) approved board members’ list to serve the boards of funds, banks and financial institutions. He is a successful angel investor, venture capitalist and expert in health sciences, education, agri, clean tech and information communications and technology (ICT). KK runs a popular podcast QuoteUnQuote With KK

Leave a comment

Your email address will not be published. Required fields are marked *