For India’s healthcare sector, the finance minister allocated Rs 99,858.56 crore for 2025-26, with an almost 11 per cent increase from the last fiscal year.

Budget Allocation

• Total allocation: ₹99,858.56 crore (11% increase from ₹89,974 crore in 2024-25).

Key Policy Measures

• Healthcare Expenditure & Policy Gaps
  • The National Health Mission (NHM) allocated ₹37,226.92 crore, but its share in the total budget has declined over time​.
  • Ayushman Bharat PMJAY allocation: ₹9,406 crore (29% increase from 2024-25)​.
  • PM Ayushman Bharat Health Infrastructure Mission (PMABHIM): ₹4,200 crore (40% increase from last year)​.
• Duty Cuts on Life-Saving Drugs
  • Expansion of essential medicines exempted from Basic Customs Duty (BCD).
  • 36 new life-saving drugs added (for cancer, rare diseases, chronic conditions).
  • 6 life-saving medicines to attract a concessional customs duty of 5%.
• Cancer Care Infrastructure
  • 200 new cancer daycare centres in government hospitals by 2025-26.
  • Plan to establish district-level cancer treatment facilities over the next 3 years​.
• Healthcare Coverage for Gig Workers
  • Inclusion under Ayushman Bharat (AB-PMJAY).
  • Registration of 10 million gig workers on the e-Shram portal under PM Jan Arogya Yojana to ensure access to medical care.
  • Budget for AB-PMJAY: ₹4,200 crore.
• Digital Infrastructure in Primary Healthcare Centres (PHCs)
  • Focus on digitization & technology-driven healthcare services.
  • Centres of Excellence for AI: Rs 500 crore investment to foster tech-driven healthcare solutions.
• Medical Tourism – ‘Heal in India’ Initiative
  • Promotion of India as a global medical tourism hub.
  • Introduction of on-arrival visas for international patients to position India as a global medical tourism destination.
• Medical Education & Workforce
  • 10,000 new medical seats to be added this year, with a long-term goal of 75,000 seats in 5 years​.
  • Atal Tinkering Labs expansion: 50,000 ATLs in govt. schools​.

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Key Healthcare Schemes and Programs

• Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB PM-JAY):
  • Launched in 2018 as the world’s largest publicly funded health assurance scheme, 
    • It initially targeted vulnerable populations covering 55 crore individuals from 12.34 crore families.
  • Coverage: Provides health coverage of Rs 5 lakh per family per year for secondary and tertiary care hospitalization.
  • Expansion: Extended to include senior citizens aged 70 and above, benefiting 6 crore senior citizens.
  • Impact: Over 36.36 crore Ayushman cards issued, with 30,000 hospitals empanelled.
• Pradhan Mantri Ayushman Bharat Health Infrastructure Mission (PM-ABHIM):
  • A Centrally Sponsored Scheme (CSS) that aims to improve health infrastructure and services in India.
  • The scheme period is from 2021-2022 to 2025-2026.
  • Aim: Strengthen public health infrastructure, including 9594 Sub Centre-Health Wellness Centres (HWCs) and 577 Critical Care Blocks.
• National Health Mission (NHM):
  • Launched: Launched by the government of India in 2013 subsuming the previous missions,
    • National Rural Health Mission (2005) and National Urban Health Mission (2012)
  • Components: It include Health System Strengthening, Reproductive-Maternal- Neonatal-Child and Adolescent Health (RMNCH+A), and Communicable and Non-Communicable Diseases, Infrastructure Maintainence.
  • Objective: The NHM envisages achievement of universal access to equitable, affordable & quality health care services that are accountable and responsive to people’s needs
  • Allocation: Rs 37,226.92 crore for improving disease surveillance, advanced testing facilities, and emergency preparedness.
• Jan Aushadhi Scheme:
  • Part of the Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP), launched in 2008.
  • Objective: Provide affordable medicines to the public, especially low-income groups and those with chronic illnesses.
  • Expansion: Over 14,000 Jan Aushadhi kendras nationwide as of 2024.

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Challenges in the Healthcare Sector in India

• Low Public Health Expenditure: India’s public healthcare spending is only 1.94% of GDP (Budget 2025), far below the National Health Policy (2017) target of 2.5%.
  • Countries like China (3.2%) and Brazil (3.9%) spend significantly more on healthcare as a percentage of GDP.
• Inadequate Healthcare Infrastructure: India has only 1.3 hospital beds per 1,000 people, far below the WHO recommendation of 3.5 per 1,000.
  • Rural areas suffer severe doctor shortages; doctor-patient ratio in India is 1:1,511 (WHO recommends 1:1,000).
• Shortage of Medical Professionals: India has only 1.7 nurses per 1,000 people, lower than the WHO norm of 3 per 1,000.
  • Bihar and Jharkhand have the lowest doctor density, leading to poor healthcare access in rural areas.
• High Disease Burden (NCDs vs. Communicable Diseases): Non-Communicable Diseases (NCDs) cause 63% of deaths in India (e.g., heart disease, diabetes, cancer).
  • India has 77 million diabetics (2nd highest in the world after China).
  • Limited support for preventive healthcare; focus on curative care over preventive measures.
• Limited Health Insurance Coverage: Over 400 million Indians lack health insurance, especially in the informal sector.
  • Ayushman Bharat (PMJAY) covers 12 crore families, but the “missing middle” (lower-middle-class workers) remains uninsured.
• Poor Preventive & Primary Healthcare: Only 40% of the health budget goes to primary healthcare, despite the National Health Policy (2017) goal of 66%.
  • Tuberculosis (TB) cases in India remain high – 2.2 million cases annually, despite efforts like the National TB Elimination Program (NTEP).
• Digital Divide in Healthcare: Rural internet penetration is only ~38%, limiting the reach of telemedicine & digital health solutions.
  • Unequal access to digital healthcare services, widening health disparities.
  • Budget 2025 prioritizes AI & digital health, but lacks a structured approach for rural accessibility.
• High Out-of-Pocket Expenditure (OOPE): As per Economic Survey 2024-25, India’s OOPE is 39.4%, making healthcare unaffordable for many.
  • Countries like the UK & Australia have approx 13% OOPE, as they rely on public healthcare systems.
• Aging Population & Lack of Long-Term Care: India’s elderly population is projected to reach 340 million by 2050.
  • Countries like Japan & Germany have dedicated geriatric care policies, unlike India.

Way Forward for the Healthcare Sector in India

• Increase Public Health Spending: Raise public health expenditure to 2.5% of GDP (as per National Health Policy, 2017).
  • Increase NHM budget allocation to strengthen primary healthcare.
  • Introduce a healthcare cess on tobacco & sugary products to generate additional revenue.
• Strengthen Primary & Preventive Healthcare: Focus on Preventive Care, Increase vaccination, screenings, lifestyle interventions.
  • Ensure two-thirds of the health budget is allocated to primary healthcare, as per NHP 2017.
• Improve Medical Infrastructure & Human Resources: Increase doctor-to-population ratio by adding 100+ new medical colleges, especially in Tier-2 & Tier-3 cities.
  • Enhance telemedicine & mobile health units for rural areas.
  • Tamil Nadu’s hub-and-spoke model for rural healthcare delivery can be replicated nationwide.
• Expand Health Insurance & Reduce OOPE: Broaden Ayushman Bharat (PMJAY): Include the ‘missing middle’ (lower-middle-class workers).
  • Subsidize health insurance premiums and reduce GST on insurance from 18% to 5%.
  • Germany’s universal health insurance model ensures coverage for all citizens, reducing out-of-pocket expenses.
• Digital Health & AI Integration: Enhance Ayushman Bharat Digital Mission (ABDM) to create interoperable Electronic Health Records (EHRs).
  • Use AI for diagnostics & predictive healthcare (e.g., AI-driven TB & cancer screening).
• Address the Aging Population & Long-Term Care: Introduce a National Geriatric Care Policy with home-based & ambulatory care models.
  • Japan’s integrated elder care system could be adapted for India’s growing aging population.
• Promote Medical Tourism & R&D in Pharmaceuticals: Create Special Medical Tourism Zones (SMTZs) with tax incentives.
  • Increase funding for R&D in pharmaceuticals & med-tech (e.g., weighted tax deductions for research).
  • Singapore’s high-quality medical tourism infrastructure attracts thousands of international patients annually.

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Conclusion

The Union Budget 2025 has laid a strong foundation, but increased funding, focus on preventive care, and digital transformation are essential for sustainable growth. Addressing infrastructure gaps, mental health issues, and affordability challenges will be crucial for achieving universal health coverage and improving overall health outcomes in India.

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