Keeping in mind its commitments towards the social sector, especially education and health, the government is mulling a big investment push for the sector. It is planning to use the public private partnership (PPP) route more effectively to finance projects in the sector. An announcement to this effect is expected in the forthcoming Budget.
According to Planning Commission officials, the government will develop a generic framework for various categories of PPPs at primary, secondary and tertiary levels of healthcare – aimed at improving cost-effectiveness, enhancing quality and expanding access through extensive stakeholder consultations. Currently, the sector gets only government investment which is just about 1% of GDP. The Centre wants to increase funding to 2% of GDP.
The government would look at contracting out well-specified and delimited projects such as immunisation to help enhance accountability. Diagnostic and therapeutic centres set up by private players in hospital premises would be encouraged. The government may consider giving them infrastructure status by giving incentives such as land at concessional rates, increasing floor area ratio and ground coverage, tax holiday and loan at lower rate.
The move would also be in sync with the government’s plans of opening its purse strings wide and introduce some big-ticket announcements projects for the sector in its last full Budget before general elections in 2009. Government sources said initially the private sector would be engaged in low-risk projects such as developing schools and hospitals before involving them in bigger projects with lower returns.
“The success of PPP in the social sector is evident from wherever they have been implemented in the country, and we feel that this is really the way forward,” a government official said. The emphasis would be on model contractual agreements (MCA) with specific performance requirements to be measured by the civil society. Costs would be built in.
About eight states like Rajasthan, West Bengal, Uttarakhand, Karnataka and Tamil Nadu have already taken the PPP route for healthcare facilities and the Centre would study these models before initiating PPPs at a larger scale.