Union Budget: Hope for the Health Sector

Prof. (Dr.) Dharmakanta Kumbhakar

(The writer can be reached at drkdharmakanta@yahoo.com)

In the Union Budget 2026-27 presented by Finance Minister Nirmala Sitharaman, a much  higher allocation has been made for the health sector compared to the previous fiscals – Rs 1,06,530.42 crore – which amounts to 1.99% of the total budget estimates (Rs 53.5 lakh crore). This represents a 6.68% increase over the budget estimates of Rs 99,858.56 crore for the 2025-26 fiscal year. Rs 4,408.93 crore has been allocated to the Ministry of AYUSH separately, which will also contribute to the health sector. The enhanced outlay in the health budget underscores the government’s focus on healthcare infrastructure development, affordable and quality healthcare service delivery, medical education, and research and innovation, in line with the vision of Viksit Bharat@2047.

Of the total health sector outlay for the 2026-27 fiscal year, Rs 1,01,709.21 crore has been allocated to the Department of Health and Family Welfare. The allocation for the government’s flagship insurance scheme, Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY), has been raised to Rs 9,500 crore from last year’s Rs 8,995 crore. The scheme aims to reduce the out-of-pocket private healthcare expenses, which have pushed many people into poverty. The increased allocation to the scheme will expand beneficiary coverage, improve service quality and strengthen hospital networks. The National Health Mission has been allocated Rs 39,390 crore to further enhance primary healthcare delivery, maternal and child health services, and disease control efforts across states and union territories.

A major boost has been accorded to healthcare infrastructure development under the Pradhan Mantri Ayushman Bharat Health Infrastructure Mission (PMABHIM), with an allocation of Rs 4,770 crore in the budget. The funds will be used to support wellness centres, set up integrated public health laboratories, and establish critical care hospital blocks in districts with a population exceeding five lakh. If implemented effectively, the scheme could transform India’s health scenario.

The budget accords strong emphasis to the upgrading and expansion of tertiary healthcare infrastructure and medical education. Under the Pradhan Mantri Swasthya Suraksha Yojana (PMSSY), including establishment expenses of new AIIMS, the budget allocates Rs 11,307 crore. This will support the construction of new institutes, the upgradation of government medical colleges, and the strengthening of super-speciality services.

The Human Resources for Health and Medical Education has been allocated Rs 1,725 crore for the establishment of new medical colleges, upgrading of undergraduate and postgraduate seats, and augmentation of nursing education. The establishment of new medical colleges to increase seats is well-intentioned and much needed, as it will help produce more doctors to meet the World Health Organization standard of one doctor for 1,000 people, while also enhancing healthcare facilities and reducing the demand-supply gap. The proposal to establish three new All India Institutes of Ayurveda is a welcome step. Recognising the growing demand for skilled healthcare professionals, a phased outlay of Rs 980 crore over three years has been allocated for the expansion and strengthening of allied health professionals’ education. The budget proposes training a large workforce of geriatric caregivers to address the needs of India’s ageing population.

For the National Tele-Mental Health Programme, launched by the government in FY 2022-23 to improve access to quality mental health counselling and care services, the budget has allocated Rs 51 crore. Mental healthcare has been prioritised in the budget, with proposals to upgrade the central psychiatric institutions in Ranchi and Tezpur and establish NIMHANS in North India. This is a welcome step.

Rs 350 crore has been allocated to the National Digital Health Mission, popularly known as Ayushman Bharat Digital Mission (ABDM), in this budget. The Finance Minister launched the National Digital Health Mission in 2022-23 to unify the entire healthcare network, facilitating better access for both healthcare providers and the public. The budget allocation of Rs 3,447 crore for the National AIDS and STD Control Programme will undoubtedly aid in ensuring safe blood transfusion services and controlling HIV and STD cases in India. Additional investments have also been proposed in the budget to expand emergency and trauma care services in every district hospital to ensure round-the-clock access to critical medical services, cancer care centers, transplant units, robotic surgery facilities, and AI-enabled medical institutions.

Rs 4,821.21 crore has been allocated separately for the Department of Health Research for medical and biotechnical research. Rs 4,000 crore has been allotted for the Indian Council of Medical Research (ICMR) alone. The use of advanced machines and artificial intelligence in disease detection and prevention, which will stem from such research, will greatly benefit healthcare practitioners. The budget has also proposed a biopharma strategy (Biopharma SHAKTI) with an outlay of Rs 10,000 crore over the next five years to boost domestic production of biologics and biosimilars, to address India’s burden shifting towards non-communicable diseases such as diabetes, cancer and autoimmune disorders, to strengthen clinical research, and to position India as a global biopharma hub.

The announcement regarding the scheme to support states in establishing five regional medical hubs in partnership with the private sector to promote India as a prime medical tourism destination will certainly bring substantial foreign exchange and help the private sector, but it holds little significance for public health.

To reduce treatment costs, especially for cancer patients, the budget proposes a full exemption of basic customs duty on 17 life-saving drugs and extends import duty exemptions to another seven rare diseases. Removing customs duty on these drugs will provide relief to affected individuals. The removal of import duty on all drugs for rare and critical diseases has been a long-standing demand. The government should seriously consider it.

The budget reflects the government’s continued commitment to strengthening India’s healthcare system and ensuring universal access to quality medical services. However, there is a dire need to increase health budget allocation, as India continues to face numerous health challenges and a strained health infrastructure. This budget allocation seems insufficient to address current challenges, such as upgrading infrastructure and ensuring accessibility and affordability of quality healthcare. Increased government spending on the health sector is the only assured way to make healthcare services affordable and prevent people from falling into poverty. The government should consider increasing public spending in the health sector to at least 5% of the total budget and 2.5% of GDP to meet the goal of NHP-2017. Hopefully, this will be addressed in future budgets.