As the Finance Ministry begins to finalise the union budget 2026-27, the healthcare sector comes forward with a comprehensive and urgent agenda including focus on primary care, stronger public health infrastructure, faster roll out of digital health, and managing the rising burden of non-communicable diseases (NCD). Last year’s budget marked a significant step up, with a combined allocation of over INR 1 lakh crore across health, AYUSH and allied sectors, alongside targeted measures to expand medical education and the health workforce, make essential medicines more affordable, advance digital health initiatives, and enhance cancer care capacity.
Expectations this year are for at least a modest increase in allocations for FY27, coupled with a stronger signal of long-term intent to reach the National Health Policy goal of public health spending at 2.5 per cent of GDP. The challenge, however, goes beyond higher outlays. Despite increased allocations, actual spending has remained largely stagnant at around 0.27 per cent of GDP over the past few years, underscoring implementation and absorption hurdles.
A key priority for the upcoming budget will be to reinforce primary and preventive care. The Ayushman Arogya Mandirs (AAMs), along with infrastructure created under PM-ABHIM, require sustained operational funding. State would need budgetary support to under the National Health Mission or enabling structured public private partnerships (PPP) to ensure they can reliably deliver comprehensive preventive and curative services by utilising the infrastructure developed thus far.
While the Ayushman Bharat–Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) has expanded demand by widening access to inpatient care, the supply of services, particularly in Tier II and III cities and underserved districts, has not kept pace. Budget 2026–27 needs to focus on enabling large scale infrastructure expansion, including incentives to crowd in private sector investment and delivery capacity.
Modernising healthcare financing may also on the reform agenda. A smarter mix of capitated payments for primary care and outcome-linked funding for tertiary services would nudge the country toward both efficiency and better health outcomes. With the Ayushman Bharat Digital Mission (ABDM) now taking deeper root, this budget also has an opportunity to allocate dedicated funds for adoption of digital platforms, interoperability, data governance and cybersecurity across the health-data ecosystem as these are critical enablers for a modern, integrated health system.
Meanwhile, the rising tide of NCDs continues to strain India’s health infrastructure. Industry bodies have sought larger allocations for diabetes, cardiovascular and cancer screening, as well as chronic-care and rehabilitation services. Strengthening primary care and embedding NCD screening and management into routine AAM services will be essential to containing long-term fiscal pressures. Regulatory clarity for digital therapeutics and telemedicine is another expectation, especially as virtual care becomes more mainstream.
The pharmaceutical and medical devices sectors, too, are looking for policy support particularly customs and duty rationalisation on lifesaving inputs, which could make advanced therapies more affordable.
Ultimately, Budget 2026–27 must balance immediate operational needs (medicines, workforce, facility upkeep) with multiyear capital ambitions such as upgrading laboratories and expanding district hospitals. A practical approach would be to front-load operational funding for AAMs, ABHIM, and other enhancements, while structuring capital-intensive projects through phased, jointly funded plans with the states.
If the upcoming budget delivers incremental funding accompanied by sharper, outcomes-oriented design (clearer pathways for primary care, digital health expansion and chronic disease management), it can place India firmly on the path toward a more resilient, accessible, affordable, and equitable health system.