Manorama Bakshi
Overview
The 2025-26 Union Budget presents a crucial moment for India’s healthcare trajectory. While expenditures on health have witnessed a steady rise, the fundamental challenge lies in reframing healthcare as an investment in national productivity and human capital rather than a fiscal burden. Strategic investments in primary care, digital health, and workforce expansion must be long-term and sustainable, aligning with India’s commitment to Universal Health Coverage (UHC) under the National Health Policy (2017).
Over the past decade, incremental budgetary increases have propelled innovation in AI-led diagnostics, digital health integration, and genomic medicine. Yet, the sustainability and scalability of these advancements remain contingent on funding, governance, and last-mile implementation. The 2025 Union Budget acknowledges the need for preventive healthcare through cancer treatment infrastructure expansion, but critical gaps persist in immunization programs, early disease prevention, and healthcare workforce expansion.
The COVID-19 pandemic underscored systemic deficiencies in hospital infrastructure, disease surveillance, and healthcare human resources. The budget, while progressive, has yet to meet the 2.5% GDP allocation recommended by the National Health Policy (2017). The path to UHC demands a bold and transformative approach, moving beyond marginal increases to structural investments in resilient health systems.
Transforming Primary Healthcare: The Last-Mile Challenge
The operationalization of 1,75,000 Health & Wellness Centres (HWCs) marks a significant step toward strengthening primary healthcare. These centres, upgraded from Sub-Centres and Primary Health Centres (PHCs), provide maternal and child health services, non-communicable disease (NCD) screening, essential drugs, and diagnostics. Yet, they currently cater to only 31% of outpatient care needs, with an average of 128 NCD patients per month per centre.
With India’s population projected to reach 1.5 billion by 2030, a rapidly aging demographic, and an escalating NCD burden, HWCs must be scaled, digitally integrated, and financially reinforced. The question remains: is the existing infrastructure sufficient to meet the evolving disease burden?
Budget 2025-26: A Step Forward, but is it Enough?
The 11% increase in healthcare expenditure, bringing the allocation to ₹1,03,851 crore, signals a commitment to public health. However, healthcare spending remains around 2% of GDP, a stark contrast to the 3-5% allocations in peer economies.
A critical budgetary highlight is the addition of 10,000 new medical seats, contributing to the government’s five-year goal of 75,000 additional seats. Over the past decade, 1.1 lakh undergraduate and postgraduate medical seats have been added, marking a 130% rise. However, concerns persist:
- No substantial public-private partnerships (PPPs) in medical education were announced.
- Student financing mechanisms remain underdeveloped, limiting access to medical training.
- Faculty shortages pose a challenge—without structured faculty development initiatives, medical education expansion risks compromising quality.
Medical Value Travel & Healthcare Innovation
The ‘Heal in India’ initiative received a ₹20,000 crore allocation under tourism, aimed at streamlining international patient care. However, dedicated medical tourism zones with tax incentives, akin to Special Economic Zones (SEZs), remain absent, limiting India’s competitiveness in the global medical value travel market.
The pharmaceutical and MedTech sectors witnessed selective budgetary support:
- 36 life-saving drugs were exempted from Basic Customs Duty (BCD), reducing treatment costs.
- R&D incentives, regulatory streamlining, and export promotion measures—long-standing industry demands—were largely unmet.
Digital Health: The Promise and the Challenge
Despite India’s AI-driven healthcare advancements, the budget lacks clear commitments toward scaling digital health infrastructure. The Ayushman Bharat Digital Mission (ABDM) holds transformative potential, yet a national strategy for AI, machine learning, and digital health remains underdeveloped.
To maximize the potential of genomics, personalized medicine, and MedTech innovation, India needs:
- Targeted investments in AI-driven diagnostics
- Interoperability frameworks for seamless digital health integration
- Clear regulatory structures ensuring ethical AI use in healthcare
Expanding Medical Education: A Double-Edged Sword?
India is producing medical graduates at an unprecedented rate, yet retention remains a major challenge. The budget expands medical seats, but key concerns remain:
- Ghost faculty and faculty shortages limit the quality of medical education.
- Lack of PPPs in medical training hampers skill development.
- Limited incentives for retention result in brain drain—Indian-trained doctors often opt for international opportunities.
Expanding medical education must be complemented with structured faculty development, attractive retention incentives, and robust PPPs, ensuring that India retains its skilled healthcare workforce.
Cancer Care: A Growing Crisis
While early detection and treatment initiatives are expanding, affordability remains a formidable barrier. The customs duty exemption on life-saving drugs is commendable, but:
- Screening coverage remains suboptimal, limiting early interventions.
- Access to immunotherapy and advanced oncology treatments remains highly inequitable.
- Palliative care remains largely neglected, leaving patients without adequate end-of-life support.
A dedicated national oncology policy is imperative to standardize cancer care, improve accessibility, and drive affordability.
Reproductive Health and Family Planning: A Neglected Priority?
Despite its demographic importance, family planning and women’s health received only a 3.5% budgetary increase. With high anaemia rates and unmet contraceptive needs, India must integrate women’s health into its economic and skilling agenda.
Policymakers must focus on:
- Investing in women’s skilling and economic participation
- Integrating reproductive health with workforce development policies
- Strengthening community-based interventions for equitable access
Total Fertility Rate (TFR) Drop: A Policy Crossroad
India’s TFR has declined to 2.0, with states like Tamil Nadu and Andhra Pradesh encouraging higher birth rates, while others struggle with high fertility and inadequate contraceptive access.
A differential population policy is necessary to:
- Expand geriatric healthcare to address an aging population.
- Incentivize workforce participation in high-fertility states for economic growth.
- Recognize unpaid care work and support caregivers in a shifting demographic landscape.
India’s population will peak at 1.63 billion by 2048, necessitating region-specific family planning and economic policies.
Conclusion: Is the Budget a Step Forward?
While the 2025-26 healthcare budget makes incremental progress, fundamental gaps persist.
✔ Expanding medical education is positive, but retention challenges remain.
✔ Healthcare innovation needs a national AI and digital health roadmap.
✔ Cancer care requires a dedicated policy framework.
✔ Family planning needs a differentiated, region-specific approach.
From Fragmented Policies to a Convergent Vision
India’s youth dividend presents a unique opportunity to align healthcare investments with skilling, employment, and innovation. Integrating health with education, technology, and economic development will create a self-sustaining healthcare ecosystem. The time for incremental steps is over—bold investments and strategic reforms will determine India’s future as a global healthcare leader.
Dr. Manorama Bakshi, Director & Head of Healthcare and Advocacy at Consocia Advisory.
Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.
Read more at IMPRI:
PPP Revival and Policy Gaps: Can Budget 2025 Deliver Growth?
Balancing Growth and Fiscal Prudence: The Challenges of Budget 2025
Acknowledgment: This article was posted by Bhaktiba Jadeja, visiting researcher and assistant editor at IMPRI.
