The Union budget 2026–27 allocates more than 1 lakh crore for health, a rise of 10 per cent from revised estimates (RE) of 2025-2026; but experts are doubtful about the impact of the budget on public health concerns.
The Plurals took a reality check of the budgetary announcements with a range of views from independent experts.
Budget announcements
Two major health announcements were a new biopharma initiative and more Ayurveda institutions. ‘Biopharma Shakti’, the initiative for which the outlay is Rs 10,000 crore, aims to boost the manufacture of biologics and biosimilars, from which medicines for cancer and other diseases are derived, and promote research in pharma. Ayurveda has got a push with the announcement of three new all India Ayurveda institutes and strengthening of Ayush – ministry set up to develop traditional medicines such as Ayurveda – infrastructure in general. Overall, Rs 1,06,530.42 crore was earmarked for public health in budget.
The budget has also exempted 17 key drugs for cancer and other diseases from basic customs duty. NIMHANS-2, a new NIMHANS, the institute for the teaching and practice of medical health, has been promised in north India.
The health ministry, in an official communication, claimed that health budget registers over 19 per cent over 194 per cent cumulative growth in the last 1/ years”.
It pointed out sector-wise allocations: Pradhan Mantri Ayushman Bharat Health Infrastructure Mission (PM-ABHIM) funds were increased by 67.66% to Rs 4,770 Crore in 2026–27; while Pradhan Mantri Swasthya Suraksha Yojana (PMSSY) funds for 2026–27 have been hiked to Rs. 11307 Crore, up by Rs. 407 Crore, over the Revised Estimate budget of 2025–26 to support new AIIMS, existing institutions and upgrade of medical colleges.
National AIDS Control Organisation (NACO) allocations were raised to Rs 3,477 crore in 2026–27, registering 30.64% increase over the revised estimate of 2025-26, while there has been an increased allotment of 24 per cent for boosting medical research, to over Rs 4,821 crore.
“Presenting the Union budget in Parliament, the Hon’ble finance minister outlined a comprehensive roadmap for healthcare reforms, reinforcing the government’s commitment to universal health coverage and inclusive growth under the leadership of Hon’ble Prime Minister Shri Narendra Modi,” claims the Union government communique.
Good news for industry
The budget has been hailed by the medical industry. “Improving the growth of biologics and biosimilars, including 17 key drugs for non-communicable diseases such as cancer, diabetes, and autoimmune diseases, will ensure that better treatments are available and affordable, providing relief to patients suffering from chronic diseases,” said Tarang Gianchandani, group CEO, Healthcare Initiatives, and CEO, Sir HN Reliance Foundation Hospital and Research Centre, Mumbai. She also welcomed the setting up of new Ayurveda institutes and the NIMHANS-2 in a statement on the website www.healthcareexecutive.in.
Vishal Bali, executive chairman, Asia Healthcare Holdings, greeted the biopharma initiative, but had a word of caution about the overall allocation. “ … the Rs 10,000 crore allocation to make India a global biopharma manufacturing hub over five years is an excellent push on the pharmaceutical side,” said Bali, but added: “The total allocation for the healthcare sector has moved marginally from Rs 99,858 crore in 2025…, which effectively means that public healthcare spending in the country as percentage of GDP remains much lower than the rest of the world.”
Yet health got only 2% of total budget
Experts point at the inadequacy of the overall health budget allocation, which has been increased in the last budget but has generally declined with the years, and also at the break-up of the total funds.
“The GDP increase is 10 per cent in nominal terms but the expenditure increase is only 7.6 per cent,” said Ravi Duggal, a public health expert based in Mumbai, who has shared his health budget analysis with The Plurals. “Health as a percentage of the total budget remains stagnant at 2 per cent. As a proportion of GDP, health is down to 0.27 per cent from 0.28 per cent in previous years. So overall there is no increase in commitment to the health budget by the Union government,” he added.
“Within the health budget, which has increased by 10 per cent in nominal terms over previous year, the increase in Ayush is 20 per cent and for health research it is 23 per cent, but for health and family welfare dept it is only 9.5 per cent. Within the health and family welfare budget, National Health Mission (NHM), the largest component, has seen a decline from 44.5 per cent of health and family welfare budget in 2024-25 to 38.7% in 2026-27,” Duggal said. The PMJAY — Pradhan Mantri Jan Arogya Yojana, a Union government scheme to provide cashless secondary and tertiary care treatment more than 10 crore poor and vulnerable beneficiary families — which was 7.9 per cent of health and family welfare budget in 2024-25, has increased to 9.34 % in 2026-27, the expert further clarified.
Primary healthcare ignored
“The health budget analysis shows that the National Health Policy 2017 goal of achieving 2.5 per cent of GDP by 2025 is still too far away. The Union government as per that policy should be budgeting 1 per cent of GDP, which should be Rs 3,50,000 crores for health,” said Duggal. The current allocation is only 31 per cent of the policy target.
The transfer of allocations to states from the health budget has declined from 54 per cent in 2024-25 to 51 per cent in the current budget, which is mostly from NHM, Duggal points out. Hence this further shifts the burden of spending for states to NHM.
Jan Swasthya Abhiyan, a national collective of health organisations, has found the health budget disappointing. In a statement issued after the budget, it has said that the budget does not look at “increasing the health of the people”.
It has questioned the assumptions of the budget, saying health is not only about treatments. Structural issues, such as the “continued under investment in the health system”, have been ignored. The collective has pointed out that the budget did not address strengthening primary health care and there was no intent expressed to bring in a “universal health system”.
Allocation versus utilisation gap
Budgets should also push resource realisations. In a report titled ‘Health Budget Grows Every Year. So Why Isn’t Public Healthcare Improving?’, IndiaSpend, an organisation that provides information and analyses on public governance based on data, says: “…persistent gaps in utilisation, staffing and quality suggest higher allocations alone cannot fix India’s public health crisis.
It points out that allocations are one thing, and utilisations another. “In 2022-23, only 65 per cent of allocated NHM funds were spent, declining further to 62% in 2024-25, as per a January 2026 analysis by the Foundation for Responsive Governance (ResGov), a New Delhi-based non-profit aiming to strengthen government and community capabilities,” the IndiaSpend website says. In Uttar Pradesh and Punjab, less than half of NHM funds were utilised, it adds.
Even as out-of-pocket expenditure in the country has declined over the past decade, meaning out of every Rs 100 spent on healthcare, Rs 60 is paid by the government, public healthcare usage has also declined, IndiaSpend says.
‘About 80% of households in Bihar do not use government health facilities, compared to 50% nationally, according to a March 2025 analysis by PRS Legislative Research based on data from the National Family Health Survey 2019-21,” the website says.
India sinks in global health ranking
Talking about the traditionally low investment in health, development economist Jean Dreze had said in an interview to ‘The Times of India’ that India was “one of the world champions of public under-spending in healthcare”. The result of continued under-investment, Dreze has said, is “a huge deficit in public health facilities”. Healthcare standards in the public sector have to be transformed for universal health care to be achieved, he has repeatedly said.
In terms of public expenditure on health as a percentage of GDP, according to a 2022 list, India was below Sub-Saharan Africa, East Asia and Pacific, Central Asia, North Africa, Latin America and the Caribbean. As Dreze had said, even if India were to achieve 2.5 per cent of public spending on health, it would still be among “low-income countries that spend the least”.