Budget 2025: A game changer for healthcare or a blow to federalism?

The allocation and announcement in the health sector in the Budget 2025-26 have been met with positive reactions from key healthcare industry leaders, predominantly healthcare businessmen, who see it as a transformative step for India's medical sector.

On the other hand, experts in the field of people's health campaigns are apprehensive about the allocation decisions, which could have far-reaching implications, such as the centralisation of healthcare.

Positive reception

The Public-Private Partnership (PPP) model emphasised in the Budget is also being welcomed as a key step in making healthcare a foundational pillar of Viksit Bharat. Industry leaders appreciate the government's support for sectoral suggestions, including the expansion of Ayushman Bharat to cover gig workers, the promotion of medical tourism, and the easing of regulations to encourage investment in the healthcare industry.

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PPP model in focus

Abhay Soi, President of NatHealth and Chairman & Managing Director of Max Healthcare, said in a statement, “The budget for 2025-26 heralds a significant milestone for the healthcare sector, with its central theme around PPP and the ease of doing business, as well as underlining the strong partnership role of the private sector required to make healthcare a foundational pillar of Viksit Bharat.”

Soi welcomed the many priority areas announced in this Budget for the healthcare sector, including medical education expansion, the launch of Heal in India, 100 per cent FDI in insurance, the broadening of PMJAY to the gig economy, enhanced ease of doing business, affordable cancer care, and broadband connectivity in primary care centres to bridge the urban-rural digital divide.

On the other hand, the Budget raises concerns with its allocation decisions among those who argue for federal rights in the health sector. Many of them point out the increase in the RCH (Reproductive and Child Health) Flexible Pool, a fund that is part of the National Health Mission (NHM), including programs and interventions related to reproductive and child health, immunisation, and other health issues.

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Allocation issues

“The RCH Flexible Pool has seen a very marginal increase from Rs 28,783 crore to Rs 30,000 crore without any corresponding enhancement in health infrastructure. This could barely cover the inflation rate and suggests a lack of strategic planning in improving healthcare delivery systems. The allocation for the Swachh Bharat Mission is Rs 5,000 crore, but reports indicate that only Rs 2,159 crore will be spent, with no expected change in the coming year. The Budget for the Jal Jeevan Mission, initially set at Rs 70,163 crore, has been revised to Rs 22,694 crore, indicating a reduction," pointed out Gopakumar Mukundan, a researcher and social commentator based in Kochi.

“The Budget promises an expenditure of Rs 67,000 crore in the coming year, which is still much less than the actual expenditure of Rs 69,992 crore in 2023-24. The expenditure for Anganwadi services was Rs 21,810 crore in 2023-24, but according to revised estimates for the current year, it has decreased to Rs 20,071 crore, showing no major change over the years. All these factors, when read alongside the cuts in the employment guarantee scheme, suggest that the Budget, in general, is targeting the middle and upper-middle classes while largely ignoring the lower strata of society,” Mukundan added.

Funding stagnation

According to an analysis by PSR Legislative Research, central funding under the National Health Mission has stagnated since 2019-20, with its share in the overall expenditure of the scheme consistently declining. In 2022-23, Rs 30,908 crore was allocated to states and union territories. While the total allocation for NHM has increased to Rs 36,000 crore for 2024-25 and further to Rs 37,226.92 crore this time, the stagnation in fund releases remains a huge concern, compounded by the intervention of the Union government in the projects.

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Experts from different ideological spheres more or less converge on the fact that the introduction of daycare cancer centres in district hospitals is expected to decentralise cancer treatment, easing the burden on metropolitan hospitals and making care more accessible. Most believe that ensuring these centres are well-equipped with trained professionals and advanced technology will be critical to their success.

Cancer care expansion

The expansion of medical education, including the addition of 10,000 new medical seats, is seen as a necessary move to address the shortage of trained healthcare professionals. The broadband connectivity initiative at the primary healthcare level is also considered a significant advancement, as it will enhance remote diagnosis and treatment, particularly benefiting rural populations.

The exemption of basic customs duty on 36 life-saving drugs and the reduction of tariffs on six others are expected to lower treatment costs for patients with cancer, rare diseases, and chronic illnesses. The introduction of new patient assistance programmes aims to improve access to essential medicines for underprivileged patients, though stakeholders stress the importance of transparency in their implementation.