India’s Healthcare Budget 2026-27: A Critical Assessment of Hits & Misses Amid Rising Disease Burden & Digital Expansion

Co-authored by Dr. Arpita Mukherjee, Professor, Indian Council for Research on International Economic Relations (ICRIER), and Eshana Mukherjee, External Consultant, ICRIER.

The Union Budget 2026-27 focuses on structural reforms, citizen benefits, and universal services, as India embarks on its journey towards a Viksit Bharat 2047. Today, with the largest population in the world, a healthy population can be an asset to the country, while an increasing health challenge can cause implications on public resources, especially when India aims to achieve universal health coverage for all by 2030. In this context, the current Budget is evaluated in terms of setting a roadmap for a healthy population.

The Economic Survey 2025-26 noted that while India has made significant progress in some health indicators, such as a reduced maternal mortality rate, there has been a rise in non-communicable diseases (NCDs), such as diabetes and cardiovascular diseases. These are closely linked to India’s rapid economic and technological growth, rising per capita income, and a simultaneous transition in dietary patterns towards higher consumption of highly processed/ultra-processed foods (UPFs).

The Major Hits

The Union Budget 20026-27 announced Biopharma SHAKTI to support the manufacturing of biologic medicines, which can help in longevity and improve the quality of life at affordable costs. This, in turn, is expected to address the growing incidence of non-communicable diseases. The Biopharma SHAKTI, with an outlay of INR 10,000 crores over the next five years, is a good initiative, especially when India has signed trade agreements with markets like the USA and the EU, and affordable pharmaceutical products can become a key export. This initiative will help to strengthen the manufacturing base, innovation, education, and research, and help the Central Drugs Standard Control Organisation (CDSCO) to meet global standards. If they do so, it will help in signing regulatory cooperation and mutual recognition agreements with export markets. The Budget also announced measures to train, skill, and capacity building of caregivers and allied health professionals, to enable expansion of access to quality care in urban and rural areas.

The overall health budget has increased over time, and the Union Budget 2026-27 continued this trend (see Figure 1). This is 10% higher than the revised estimates of 2025-26, with a total allocation of INR 1,06,530 crore. The allocation of around 37% of the Ministry of Health budget to the National Health Mission (INR39,390 crores), for strengthening primary healthcare delivery, maternal and child health services, and for disease control, is a good initiative. The Budget proposed to have a scheme to support states in establishing five Regional Medical Hubs in partnership with the private sector, which is an excellent initiative to promote medical value tourism. Further, the Union Budget 2026–27 reflects a notable push toward medical research and innovation under the Department of Research. The allocation for the Indian Council of Medical Research (ICMR), New Delhi, has been set at INR 4,000 crore in BE 2026–27, an increase of INR 850 crore over the Revised Estimates of INR 3,150.50 crore for FY 2025–26, representing a growth of approximately 26.98%.

Figure 1: 10-Year Budget Estimates for Ministry of Health and Family Welfare

Digitalization Continues to be the Focus

Digitalization of healthcare has been a focus area of the government, with initiatives such as the Ayushman Bharat Digital Mission (ABDM) and e-Sanjeevani aimed at improving access to digital health services. The allocation for the Ayushman Bharat Digital Mission has been INR 350 crore for FY 2026–27, reflecting an increase of INR 25.74 crore (a 7.94% rise) over the FY 2025–26. This will be used for the expansion of digital health records, interoperability frameworks, telemedicine services, and integrated hospital information systems

Some Major Misses

While both the Economic Survey and the Union Budget 20026-27 acknowledge the rising incidence of non-communicable diseases, like diabetes, the Budget did not propose any scheme or funding for awareness campaigns on the type of diet that people should follow and how they can prevent non-communicable diseases. Even Institutions such as the ICMR-National Institute of Nutrition also appear to have constrained budget allocations for the wider dissemination of dietary guidelines.

From a budgetary perspective, prioritising prevention over cure is generally more cost-effective, making its limited emphasis a notable gap in the current budget.

The ongoing initiative in India, like Saksham Anganwadi and Poshan 2.0, primarily focuses on malnutrition, with the Union Budget allocating INR 23100 crores (around 21.7% of the Ministry Budget); however, emerging concerns such as overnutrition and micronutrient deficiencies received less focus, with limited clarity on budget funding use. Further, the Economic Survey highlights the growing prevalence of obesity among children, with over 3.3 crore children affected in 2020, a figure projected to increase to 8.3 crore by 2035 (World Obesity Atlas, 2024), pointing to the need to address these challenges. Moreover, micronutrient deficiencies, including Vitamin D deficiency, remain important from a public health perspective due to their potential long-term health implications, which have not been addressed in the Union Budget. In this context, expanding existing efforts to include targeted identification, screening, improved access to supplementation, and stronger data monitoring, along with a dedicated programme and funding, is needed to support a comprehensive strategy and mitigate these issues.

While digitalization has been in focus, there is limited explicit reference to the use of emerging technologies such as AI and machine learning in healthcare delivery, research, or system optimization. Although broader innovation funds and digital health initiatives may indirectly support such use cases, greater clarity on focused programs, dedicated funding, and an implementation framework could support the adoption of these technology areas, such as clinical decision support, early disease detection, diagnostics, and hospital operations.

Overall Assessment

Overall, while the health budget has increased over time, it remains relatively low considering India’s population size and the rising incidence of NCDs and micronutrient deficiencies. The health budget is around 1.9% of the total government expenditure and only around 0.26% of the GDP. The National Health Policy, 2017, had recommended that the health sector Budget should be 2.5% of the GDP by 2025. This target has not been achieved. Future budgets may focus on how to increase the allocation for preventive healthcare to reduce NCDs. The current Budget has rightly focused on biopharma manufacturing and creating hubs for medical value tourism, but the existing scheme could have been modified to support an increase in awareness about a healthy diet and for mass-scale testing of deficiencies like Vitamin D Deficiency. Given the rising incidence of NCDs, the Budget may need a more holistic approach from prevention to cure, with targeted interventions. The digitalisation Budget could have been higher to speed up the digitalisation process. While the Budget announcements cover multiple segments of healthcare, their success will depend on implementation and monitoring. The success of initiatives like Biopharma SHAKTI will depend upon real-time data analytics and a system that allows transparency, has accountability, and allows sharing of data with trust.

Disclaimer: This is an authored article, DHN is not liable for the claims made in the same.

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