India’s Health Sector

The Union Budget 2026–27, presented by the Finance Minister, signals a recognition of India’s growing health and care needs, driven by demographic transition, ageing population, and rising burden of diseases. However, a closer examination of allocations and priorities reveals a significant gap between stated intent and actual public investment, raising concerns about the government’s commitment to strengthening public healthcare.

Health Allocation in Union Budget 2026–27

The combined allocation for the Ministry of Health and Family Welfare and AYUSH in the Union Budget 2026–27 stands at ₹1,10,939 crore, an increase from ₹1,03,851 crore in the 2025–26 Budget Estimates.

However, after adjusting for inflation, this increase translates to only about a 3.5 per cent real-term growth. Notably, real health spending in 2026–27 remains lower than the actual expenditure in 2020–21, indicating stagnation rather than expansion of public health investment.

Key Announcements for the Health Sector in Union Budget 2026–27

SHAKTI Initiative for Biopharma and Healthcare Innovation

The Budget announced the Biopharma Strategy for Healthcare Advancement through Knowledge, Technology and Innovation (SHAKTI) initiative to strengthen India’s capacity in biologics, biosimilars, and advanced pharmaceutical research.

With an outlay of ₹10,000 crore over five years, the initiative aims to position India as a global biopharma manufacturing hub. It includes the creation of a biopharma-focused network with three new National Institutes of Pharmaceutical Education and Research (NIPERs), the upgrading of seven existing NIPERs, and the establishment of over 1,000 accredited clinical trial sites.

Expansion of Health and Care Workforce

The Budget proposes the creation of a cadre of 1.5 lakh Allied Health Professionals (AHPs) and caregivers to meet the rising demand for elderly care, long-term care, and rehabilitation services. Allied health professionals play a crucial role in diagnostics, therapy, and support services, complementing doctors and nurses, especially in a rapidly ageing society.

Strengthening AYUSH Infrastructure

The Budget announced the establishment of three new All India Institutes of Ayurveda, along with the upgradation of AYUSH pharmacies and drug testing laboratories to improve certification standards. It also proposed upgrading the WHO Global Traditional Medicine Centre, reflecting continued emphasis on traditional systems of medicine.

Medical Tourism and Public–Private Partnerships

A scheme was proposed to support States in establishing five Regional Medical Hubs through public–private partnerships. These hubs are envisioned as integrated healthcare complexes combining medical care, education, research, diagnostics, post-care, and rehabilitation. They will also include AYUSH centres and Medical Value Tourism Facilitation Centres to promote India as a global medical tourism destination.

Preventive and Wellness-Oriented Approach

The Budget reiterated the importance of preventive healthcare, wellness, lifestyle-based interventions, and integration of traditional medicine under AYUSH. However, this emphasis remains largely rhetorical, with limited clarity on funding and implementation mechanisms.

Mental Health and Trauma Care

The Budget provided for the establishment of NIMHANS-2 and the upgradation of National Mental Health Institutes in Ranchi and Tezpur as regional apex institutions, indicating recognition of the growing mental health burden.

Medical Education, Infrastructure, and Digital Health

The Budget reaffirmed support for expanding medical and allied health education capacity and strengthening select tertiary care institutions. It also continued allocations for digital health initiatives, aiming to improve efficiency and service delivery. Nevertheless, concerns persist regarding digital exclusion, data privacy, and uneven regional benefits.

Key Concerns and Issues

Declining Priority for Health Spending

Despite nominal increases, health spending as a share of GDP has declined from 0.37 per cent in 2020–21 to 0.28 per cent in 2026–27. Similarly, health’s share in the total Union Budget has fallen from 2.26 per cent to 2.07 per cent, indicating reduced fiscal priority.

Cuts to Public Health and Preventive Programmes

Core public health programmes such as the National Health Mission (NHM), PM Swasthya Suraksha Yojana (PMSSY), nutrition schemes, and health research have witnessed significant cuts. In contrast, schemes aligned with commercial and private-sector interests, particularly Pradhan Mantri Jan Arogya Yojana (PMJAY) and the Digital Health Mission, have received increased allocations despite persistent implementation challenges.

Uncertain Future of Health and Wellness Centres

Health and Wellness Centres (HWCs) are central to delivering comprehensive primary healthcare. Since they are funded under NHM, sustained cuts to NHM cast serious doubt on whether this network can expand or even function effectively.

Case Study: National Health Mission (NHM)

The NHM is the backbone of India’s public health system, covering maternal and child health, disease control, non-communicable diseases, and primary and secondary healthcare. In the 2026–27 Budget, NHM has experienced a real-term decline of nearly 8 per cent compared to 2021–22.

Actual NHM expenditure has consistently exceeded allocations, reflecting high unmet demand. NHM also supports frontline health workers such as ASHAs, who were globally recognised during the COVID-19 pandemic. Reduced funding threatens essential services like safe deliveries, immunisation, TB treatment, and programmes addressing climate change and health.

Case Study: Pradhan Mantri Jan Arogya Yojana (PMJAY)

PMJAY has emerged as a favoured programme. While ₹7,500 crore was allocated in 2024–25, actual spending was lower at around ₹6,983 crore. In contrast, the 2026–27 allocation has increased by 36 per cent compared to 2024–25.

This expansion is concerning as PMJAY is widely criticised for:

• Largely benefiting the private healthcare sector,

• Excluding many Dalits, Scheduled Tribes, and marginalised groups,

• Providing only partial financial protection, leaving households with high out-of-pocket expenditure.

Medical Tourism versus Public Healthcare

The use of public resources to support private healthcare infrastructure for wealthy foreign patients risks deepening health inequities. This comes at the expense of strengthening public healthcare systems, which remain the primary source of care for India’s poor and marginalised populations.

Way Forward: Recentring Public Healthcare

India’s health challenges require a robust, well-funded public healthcare system. Persisting with a narrow focus on insurance-based and tourism-oriented models demands serious reconsideration. The Union government must:

• Restore and expand funding for NHM and public health infrastructure,

• Ensure fair wages and social security for frontline health workers,

• Prioritise universal, free, and quality healthcare, especially for vulnerable populations.

Conclusion

While the Union Budget 2026–27 acknowledges India’s growing health and care needs, its allocations reveal a mismatch between ambition and investment. Without sustained public spending, strong primary healthcare, and equity-focused policies, India risks deepening health inequalities and undermining long-term human development. Strengthening public healthcare must therefore become a central pillar of India’s development strategy, rather than a peripheral budgetary concern.