Budget | Health expenditure rises to Rs 1.15 lakh-cr, but challenges remain

The Union Budget 2025-26 has allocated a total of ₹1.15 lakh crore to the health sector, marking a substantial increase from previous years. According to the Finance Minister, the key focus areas include the expansion of public health schemes, strengthening of primary and tertiary care facilities, and the integration of advanced technologies like Artificial Intelligence into healthcare delivery.

The budget also emphasises the importance of Ayushman Bharat (PMJAY), with an allocation of ₹9,406 crore, aimed at providing universal healthcare coverage to millions of vulnerable families. Additionally, ₹4,200 crore has been earmarked for the Pradhan Mantri Ayushman Bharat Health Infrastructure Mission (PM-ABHIM), which focuses on upgrading hospitals and primary health centers (PHCs).

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To address the shortage of healthcare professionals, ₹1,675 crore has been allocated for human resources and medical education, targetting the training of doctors and paramedics. The National Digital Health Mission (NDHM), with an allocation of ₹340 crore, aims to expand digital health records and improve healthcare accessibility through technology. Furthermore, ₹710 crore has been dedicated to medical research and AI in healthcare, focussing on disease surveillance and AI-driven diagnostics.

The budget also allocates ₹478 crore for tertiary care and specialised institutes, including the expansion of AIIMS and regional health centres. These allocations reflect a comprehensive approach to addressing India’s healthcare challenges, but their success will depend on effective implementation and sustained investment in the sector.

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However, this allocation still falls short of addressing the vast infrastructure gaps, particularly in rural and under-served areas.

Key health-related announcements:

1. Universal access to high-quality healthcare

The government reiterated its commitment to providing universal access to high-quality, affordable, and comprehensive healthcare. This aligns with the broader goal of ensuring zero poverty and 100 per cent skilled labour with meaningful employment. However, the budget lacks specific measures to address the rural-urban healthcare divide, which remains a significant barrier to achieving universal health coverage.

2. Expansion of medical education

The budget highlights the government’s efforts to expand medical education, with 1.1 lakh undergraduate (UG) and postgraduate (PG) medical seats added over the past decade—a 30 per cent increase. In the coming year, 10,000 additional seats will be introduced, with a target of 75,000 new seats over the next five years.

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3. Day care cancer centres

The announcement to establish Day Care Cancer Centres in all district hospitals over the next three years is a significant step toward improving access to cancer care. In 2025-26, 200 such centres will be set up, which will help reduce the burden on tertiary care hospitals and bring cancer care closer to patients. However, the budget does not provide details on the funding mechanism or operational plans for these centres.

4. Saksham Anganwadi and Poshan 2.0

The Saksham Anganwadi and Poshan 2.0 program, which provides nutritional support to 8 crore children, 1 crore pregnant women, and 20 lakh adolescent girls, has seen enhanced cost norms in the budget.

5. Healthcare for gig workers

Recognizing the contribution of gig workers to the economy, the budget announced healthcare coverage under PM Jan Arogya Yojana (Ayushman Bharat) for nearly 1 crore gig workers. However, the budget does not clarify how this coverage will be financed or integrated with existing health insurance schemes.

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6. Medical tourism and Heal-in-India

The budget’s emphasis on promoting medical tourism and the Heal-in-India initiative is aimed at positioning India as a global hub for healthcare services.

7. Customs duty exemptions

The budget includes customs duty exemptions for 36 life-saving drugs and concessional duties for 6 more medicines, particularly benefiting patients with cancer, rare diseases, and chronic conditions.

Critical challenges remain

While the Budget 2025-26 makes several commendable announcements in the health sector, critical challenges remain. The high out-of-pocket expenditure, the rural-urban healthcare divide, and the rising burden of non-communicable diseases (NCDs) are issues that require urgent attention. The budget’s focus on preventive healthcare is a step in the right direction, but it lacks concrete measures to address these challenges.

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The allocation for digital health technologies, including AI and telemedicine, is seen as a promising development by sector experts. However, many of them see the investment of ₹500 crore for a Centre of Excellence in AI for Education as modest compared to the scale of the challenge.

A more comprehensive plan is needed to leverage digital health to bridge the rural-urban healthcare divide and ensure equitable access to technology-driven healthcare solutions.