Healthcare gets a booster shot with 10% budgetary hike

The Union Budget 2025-26 has given priority to the healthcare sector with provisions for expanding medical education, promoting medical research, enhancing cancer care affordability, extending the Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (PM-JAY) to gig workers and promoting medical tourism.

The Economic Survey 2024-25, tabled in Parliament on January 31, brought out an increase in India’s health spending to Rs 6.1 lakh crore in 2025 from Rs 3.2 lakh crore in 2020-21. India’s share of health expenditure rose to 3.8 per cent of the GDP in 2022. Between 2015 and 2022, out-of-pocket expenses dropped from 62.6 per cent to 39.4 per cent, with the PM-JAY playing a decisive role in it.

To provide universal health coverage to all citizens, the PM-JAY benefit was extended last year to all people over 70 years. The government now proposes to include gig workers under the scheme. This move will ensure financial and health security for an estimated one crore workers in the informal sector who were not covered earlier under any insurance. However, for this, the government must ensure that the aggregator companies must be transparent in sharing data on gig workers.

While the proposed allocation for health has gone up by 9.7 per cent to Rs 99,858.56 crore compared to the previous year, the Ayushman Bharat Infrastructure Mission gets a 26 per cent increase while the PM-JAY has a raise of 28.85 per cent, keeping in view its increasing ambit.

The provision of internet facility at primary health centres can be leveraged to enhance digital health and telemedicine services. However, the National Health Mission gets only a 3.77 per cent raise.

Though the Economic Survey has talked of the importance of health of the nation, more emphasis is required towards health promotion and disease prevention.

The FM announced 10,000 additional seats in medical colleges in the coming year and 75,000 seats in the next five years. In the last 10 years, MBBS and postgraduate seats have more than doubled to 1,18,137 and 73,157, respectively. However, there are major concerns in this regard. There is a dearth of medical teachers and the National Medical Commission has been diluting the norms for the numbers and experience of teachers. A huge disparity between undergraduate and postgraduate seats remains.

Additionally, there should be a dynamic policy for the number of seats in different specialities. For example, India will need more oncologists, intensivists and trauma specialists in the coming years and fewer cardiac surgeons. The country also needs more skilled manpower, like nurses, technicians and other support staff, which needs dynamic planning.

The government has proposed major initiatives to help cancer patients. Statistics show a rising incidence of all major cancers in the country. According to the National Cancer Registry Programme Report 2020, one in nine persons is likely to develop cancer in their lifetime. The government will facilitate the setting up of day-care cancer centres in all district hospitals in the next three years, with 200 centres to be established in 2025-26. Such centres are typically used for chemotherapy. They will facilitate access to cancer treatment, which is now available at tertiary care centres only. It is proposed to use the PPP mode for this initiative. However, there is a shortage of trained manpower and infrastructure, like advanced imaging and cancer diagnostics, both of which need to be addressed.

In a move with a far-reaching impact on out-of-pocket expenses, the Budget proposes to reduce the prices of many drugs. To provide relief to patients suffering from cancer, rare diseases and other chronic diseases, 36 lifesaving drugs have been fully exempted from basic customs duty. Six additional lifesaving medicines will now attract concessional customs duty of 5 per cent. Concessions will also be granted to bulk manufacturers of the above classes of drugs to promote local companies.

Another proposed thrust area is medical tourism. With the availability of expert medical professionals and infrastructure in the country, a multitude of private hospitals in India already attracts patients from South-East Asia, Africa and West Asia. It is estimated that some 1.4 crore people travel to different countries for better medical treatment every year. India has over 35 hospitals accredited by the JCI (Joint Commission International), which ensures adherence to global norms.

The government had proposed a medical tourism initiative, ‘Heal in India’, in 2022 to be promoted in partnership with the private sector. But it was a non-starter. It was proposed to have a nodal agency, the Medical Value Travel Council, co-chaired by the health and tourism ministries to streamline the integration of all stakeholders. The government has re-emphasised the scope of medical tourism. It needs to ensure that steps are taken to tap the huge potential of medical tourism by streamlining access to patients and facilitating ancillary support units.

The Budget proposals are likely to boost pharmaceutical infrastructure by providing impetus to MSME units. The government has allocated Rs 2,445 crore to production-linked incentive in the pharma sector. A substantial sum of Rs 20,000 crore has been earmarked for private sector-driven research, development and innovation. As was seen during the Covid-19 pandemic, there is a need to indigenise drug discovery and production as well as the manufacture of medical equipment. India needs to go to the next level in medical innovation with emphasis on precision medicine, gene therapies and newer biologics.

Other notable proposals are allocation of funds for mental health and emphasis on providing nutrition to children and pregnant women. Allocation for medical research has been hiked by 18.14 per cent. The proposal to have 100 per cent FDI in insurance is a welcome step.

However, increasing tax exemption for preventive health check-ups, integrating outpatient diagnostics into insurance packages and rationalising GST in healthcare are among the measures needed.

The Budget proposals envisage a bigger role of the private sector. More stress must be laid on primary care and disease prevention and more discussions should be held on education and skill development of healthcare workers. The full potential of digital health records, telemedicine and AI needs to be realised.