Health Budget Rises Over Rs 1 Lakh Crore, Focus Shifts To Infrastructure And States

The Union government’s health spending is set to rise steadily over the next two years, with the latest Budget signalling a gradual but clear reorientation towards public health infrastructure and state capacity building, data shows.

According to the Union Budget 2026-27 documents, the overall health budget has increased from Rs 88,353 crore in actual spending in 2024-25 to Rs 98,311 crore in budget estimates for 2025–26, before being revised down to Rs 94,625 crore during the year.

For 2026-27, allocations have been raised to Rs 1,04,599 crore, marking an increase of over 18 per cent compared to 2024-25. Experts believe the mid-year cut in 2025-26 could suggest cautious spending and recalibration, even as the long-term trajectory remains upward.

A major shift is visible in funding support to states for public health infrastructure. Allocations under this head have jumped sharply from Rs 699 crore in 2025–26 to Rs 4,200 crore in 2026–27, indicating a renewed focus on strengthening health facilities at the state and district level. The move aligns with the Centre’s emphasis on decentralised health systems and improving last-mile infrastructure.

Spending under the flexible pool for reproductive and child health, health system strengthening, national health programmes and the National Urban Health Mission shows a return to stability after a dip.

According to the budget documents, the allocations declined from Rs 31,685 crore in 2024–25 actuals to Rs 29,867 crore in 2025-26 revised estimates, but are budgeted to recover to Rs 31,820 crore in 2026-27, suggesting a continuity in core public health interventions.

Funding for Ayushman Bharat Pradhan Mantri Jan Aarogya Yojana, India’s largest health insurance scheme for vulnerable and elderly population, continues to rise but modestly. Allocations have grown from Rs 7,179 crore in 2024–25 actuals to Rs 9,500 crore in 2026–27. However, the trimming of revised estimates in 2025–26—from Rs 9,406 crore to Rs 9,000 crore—points to a phase of consolidation rather than aggressive scaling.

Similarly, investment in human resources for health and medical education has increased sharply in relative terms, reaching Rs 1,725 crore in 2026–27 from Rs 442 crore in 2024–25.

What do experts believe?

Taken together, the numbers point to a health budget that is expanding steadily, prioritising infrastructure and system capacity, while keeping flagship programmes on a measured, sustainable path.

“The Union Budget 2026 clearly recognises that India’s healthcare priorities must now shift from reactive treatment to long-term preparedness, research and disease prevention,” said Dr Purshotam Lal, chairman, Metro Group of Hospitals.

Similarly, pharma industry executives also found the budgetary announcements “very encouraging”.

Arushi Jain, director, contract research manufacturing organisation, Akums Drugs & Pharmaceuticals, said the Union Budget 2026 has created “a stable, long-term ecosystem where the industry needs to plan boldly and invest with confidence.”

“For Akums, this gives us the confidence to deepen our R&D pipeline, scale up world-class capabilities and bring advanced therapies to patients more quickly and affordably.”

The industry also celebrated the move to exempt customs duty on 17 oncology drugs. “The Budget proposes exemption from basic customs duty on 17 lifesaving drugs and medicines, including key cancer therapies, and adds seven rare diseases for exemption on personal imports of drugs, medicines, and specialised foods. This move will provide tangible financial relief to families managing serious and chronic illnesses, especially in smaller cities where treatment often involves travel and additional expenses. By reducing the cost burden, patients can access care more consistently without compromising on quality,” Dr Dharminder Nagar, co-chair, FICCI Health and Services and managing director of hospital chain, Paras Health.

The announcements have also been welcomed by medical device manufacturers. “Budget 2026 positions India to accelerate its transition from volume‑driven production to value‑driven global leadership in pharmaceuticals, biopharma, and medical devices. With Biopharma Shakti as its anchor and a renewed focus on regulatory and manufacturing reforms,” said Rajiv Nath, forum coordinator, Association of Indian Manufacturers of Medical Devices (AiMeD).