The Union budget presented on Saturday saw a 9.8% increase in the allocation for the healthcare sector to ₹99,858.56 crore from ₹90,958.68 crore in the previous financial year but overall health allocation remained below 2% of the budget.
The share of health in the FY26 budget increased marginally to 1.97% from 1.9% in FY25 and 1.87% in FY24. The year-on-year growth for FY25 was 8.2%.
Focusing on expanding medical care and infrastructure the budget extended the Ayushman Bharat scheme to gig workers, increased the number of seats in medical education, lent support to medical tourism, announced the establishment of 200 cancer daycare centres and exempted duties on some essential medicines for cancer and rare diseases.
The Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB PM-JAY) received an allocation of ₹9,406 crore for FY26, marking a 24% increase from the Revised Estimate of ₹7,606 crore for FY25. The government also allocated ₹4,200 crore for the Pradhan Mantri Ayushman Bharat Health Infrastructure Mission (PMABHIM).
The National Health Mission (NHM) was allocated ₹37,226.92 crore, while the National Mental Health Programme received ₹79.6 crore. Autonomous bodies were allocated ₹20,046.07 crore, and funding for AIIMS Delhi was increased to ₹5,200 crore.
Finance minister Nirmala Sitharaman said gig workers will now be covered under the Ayushman Bharat health insurance scheme, highlighting their role in the new-age services economy. She said the government will arrange identity cards and register them on the e-Shram portal.
The initiative is expected to benefit nearly 10 million gig workers, defined by NITI Aayog as those who are employed “outside the traditional employer-employee arrangement”. These workers broadly fall into two categories -- platform and non-platform.
Finance Minister Nirmala Sitharaman announced that 36 lifesaving drugs, including those for cancer and rare chronic diseases, will be fully exempt from Basic Customs Duty.
Sitharaman, said six lifesaving cancer and rare disease drugs will now be subject to a reduced customs duty of just 5% if they are provided free of charge to eligible beneficiaries.
The government has also allocated ₹2,445 crore for PLI for the pharmaceutical industry.
She announced the creation of 75,000 new medical seats over the next five years to meet the rising demand for healthcare professionals in the country.
"Our government has added almost 1.1 lakh undergraduate and postgraduate medical education seats in 10 years, an increase of 130%. In the next year, 10,000 additional seats will be added in medical colleges and hospitals towards the goal of adding 75,000 seats in the next five years," she said.
Boost to medical tourism & MBBS education
India is known as hub of medical tourism for its affordable and quality healthcare services. Every year, thousands of foreign patients come to India to seek low-cost medical services. In 2023, India launched a portal called Heal in India to boost medical tourism in the country.
Industry reports say that the medical tourism market in India was valued at between $7.56 billion and $10.4 billion in 2024. The number of medical tourists visiting India in 2024 was estimated to be around 7.3 million.
Dr. Aashish Chaudhry, Managing Director, Aakash Healthcare said that the provisions for healthcare are on expected lines. "The Union Budget 2025-26 presents a progressive vision for strengthening India's healthcare system. Capacity building is a crucial aspect of developing a robust healthcare ecosystem, he added. Establishing 200 new daycare cancer centers in district hospitals will improve access to cancer treatment, especially in underserved regions,” he said.
"Total health and family welfare budget increased from INR 87656.9 in 2024-25 BE to 95957.87 cr in 2025-26 BE, 9.47% increase compared to 2024-25 BE in absolute terms, and if adjusted to inflation, it is a moderate increase only. However, the department of health research witnessed 18% hike compared to previous budget estimate and this may create more opportunity for health research through ICMR and DHR.,"Dr Sarit Rout, Economist, Indian Institute of Public Health (IIPH) Bhubaneswar.
"Overall, total allocations to Health including Ayush ministry remains more or less 2% of general government expenditure, no change in the share. Many programmes including NHM does not witness any substantial hike. The national health mission shows a moderate increase in the allocations, which is just 4%, compared to 2024-25 BE and this will have many ramifications on the already strained health infrastructure in rural areas," said Dr Sarit Rout, said.
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