The Union Budget 2026 makes several headline-grabbing announcements in the health sector, from expanding the caregiving workforce to boosting pharmaceutical innovation. Yet, a closer look at the allocations reveals a sobering reality. While policy intent appears progressive, fiscal commitment to public healthcare has weakened, raising concerns about equity, access and the future of India’s health system.
What the Budget Gets Right on Health
Two announcements stand out positively. First, the proposal to create a cadre of 1.5 lakh Allied Health Professionals and caregivers responds to a genuine structural need. With India’s elderly population expanding rapidly, care work is becoming a critical pillar of social infrastructure.
Second, the launch of Biopharma SHAKTI (Strategy for Healthcare Advancement through Knowledge, Technology and Innovation) reflects recognition of India’s potential in biologics and biosimilars. By focusing on strengthening the network of National Institutes of Pharmaceutical Education and Research, the scheme aims to boost domestic research, innovation and production capacity in a strategically important sector.
Nominal Increase, Real Decline
Despite these announcements, the overall fiscal picture is underwhelming. The combined allocation for the Ministries of Health and AYUSH has increased from ₹1,03,851 crore in the 2025–26 Budget Estimate to ₹1,10,939 crore in 2026–27. In nominal terms, this appears significant.
However, once inflation is accounted for, the real increase is only about 3.5%. More troubling is the fact that real health spending is now lower than what was actually spent in 2020–21. In practical terms, this means the level of care that could be delivered during that period cannot be assured today, even as costs of medicines, diagnostics and services have risen sharply.
Health Losing Ground in the Budget
The decline becomes starker when seen in macro terms. Union government health spending as a share of GDP has fallen from 0.37% in 2020–21 (actual expenditure) to just 0.28% in the 2026–27 Budget Estimate. Similarly, health’s share in the total Union Budget has dropped from 2.26% to 2.07%.
These trends suggest that, despite rhetorical emphasis, health has slipped down the list of fiscal priorities over the past few years.
Public Health Schemes Bear the Brunt
A disaggregated look at allocations reveals a clear pattern. Schemes that strengthen public healthcare and protect vulnerable populations have faced sharp cuts. These include the National Health Mission, the Pradhan Mantri Swasthya Suraksha Yojana, nutrition programmes and health research.
The National Health Mission (NHM), which anchors maternal and child health, disease control, and non-communicable disease programmes, has seen an 8% decline in real terms since 2021–22. This is particularly worrying because actual expenditure under NHM has consistently exceeded budgeted allocations, indicating unmet demand.
Cuts to NHM directly affect essential services such as safe deliveries, childhood immunisation and tuberculosis treatment. They also constrain payments to frontline health workers like ASHAs — predominantly women — whose role during the pandemic earned global recognition but whose demand for minimum wages remains unresolved.
Primary Care and Emerging Health Risks
Several critical interventions — including programmes on non-communicable diseases and the health impacts of climate change — are routed through NHM. Reduced allocations therefore weaken India’s ability to respond to emerging health challenges.
Health and Wellness Centres, envisioned as the backbone of comprehensive primary care, are also funded through NHM. With NHM resources shrinking, the future expansion and quality of these centres remains uncertain, undermining the goal of universal primary healthcare.
PMJAY: Rising Allocation, Persistent Concerns
In contrast, the Pradhan Mantri Jan Arogya Yojana (PMJAY) continues to attract increased funding. Despite persistent evidence that it disproportionately benefits the private sector and excludes many marginalised groups, PMJAY has seen a 36% increase in allocation in the 2026–27 Budget Estimate compared to 2024–25.
Notably, even in 2024–25, actual spending under PMJAY was lower than the allocated ₹7,500 crore, with only ₹6,983 crore utilised. The expanding budget share of PMJAY, despite underperformance and high out-of-pocket expenses for beneficiaries, raises questions about policy priorities.
Privatisation by Another Name?
The Budget’s proposal to develop medical tourism hubs through public–private partnerships reinforces these concerns. Such initiatives risk diverting public resources towards serving affluent foreign patients, while India’s poor and marginalised populations struggle to access basic healthcare.
Large sections of Dalits, Scheduled Tribes and informal workers derive little benefit from insurance-based models like PMJAY, often paying significant amounts out of pocket despite nominal coverage. In this context, expanding private healthcare using public funds risks deepening inequalities rather than reducing them.
What to Note for Prelims?
- Health allocation 2026–27: ₹1,10,939 crore (Health + AYUSH).
- Health spending as % of GDP: declined to 0.28%.
- Key schemes: NHM, PMJAY, PMSSY.
- New initiative: Biopharma SHAKTI.
What to Note for Mains?
- Critically assess trends in public health expenditure in India.
- Compare insurance-based healthcare models with public provisioning.
- Examine the role of NHM in strengthening primary healthcare.
- Discuss risks of excessive privatisation in the health sector.
The Budget’s health narrative highlights a familiar contradiction: ambitious announcements alongside shrinking real allocations. If India is serious about universal, equitable healthcare, fiscal priorities must shift decisively towards strengthening public systems that serve the poor and marginalised — not away from them.
Last Modified: February 3, 2026