India is at a key moment in healthcare change, with the Union Budget for FY 2025-26 indicating a renewed focus on enhancing access to healthcare. Government spending in the sector has increased over time, with expenditure witnessing a staggering 191 per cent growth since FY 2015, up to ₹998.586 billion. Yet, even with this growth, healthcare spending remains below the 2.5 per cent of GDP target laid down by the National Health Policy 2017. Inflation remains a challenge, eroding the purchasing power of investments and worsening the financial burden on citizens.
PM-JAY: Expanding coverage but leaving many behind
One of the key points of India's healthcare sector is the Pradhan Mantri Jan Arogya Yojana (PM-JAY), the largest government-sponsored health insurance scheme in the world. The scheme has just been expanded to cover 10 million gig workers, aided by a 28 per cent boost in its budget. This is a step in the right direction, but big chunks of the informal workforce, such as daily wage earners, still have no health insurance. One of the chief hindrances to closing this gap is the unavailability of proper data on informal workers, making it difficult to plan effective interventions. The second issue is that PM-JAY only covers secondary and tertiary care hospitalisation and excludes other very important elements of healthcare like outpatient services and diagnosis. This constraint is becoming increasingly relevant as India experiences an epidemic of chronic diseases that demand ongoing and inexpensive access to primary healthcare services. Moreover, insurance penetration continues to be low, especially among middle-class households and informal sector workers. Policy interventions such as offering GST relief on insurance premium payments and raising Section 80D tax deductions could go a long way in making health insurance affordable and accessible.
Strengthening rural healthcare: The funding-implementation paradox
To address the rural-urban divide in healthcare, the government has also raised the outlay for the National Health Mission (NHM) by 15.3 per cent and that of the PM-ABHIM infrastructure scheme by 31.25 per cent. There are proposals to set up 200 Daycare Cancer Centres, which can be a game-changer in enhancing cancer care. Nevertheless, even with these budgetary allocations, implementation is a serious issue, especially in terms of human resources and staffing. India has been historically plagued by a lack of healthcare practitioners in rural regions, and the gap continues to be bridged. Though a 661.4 per cent boost to medical education funds should fill up to 75,000 more seats by 2030, it does not ensure that the trained practitioners stick around in poorer areas. The brain drain of medical professionals towards urban hubs and developed countries adds to the issue. In order to achieve equitable distribution of medical practitioners, policymakers should prioritise targeted incentives, improved working conditions, and long-term systemic changes that make rural healthcare an attractive and sustainable career option.
The digital health revolution and persistent challenges
India's healthcare system is increasingly undergoing digital transformation, with eSanjeevani and other platforms enabling more than 216 million teleconsultations by March 2024. With 95.15 per cent of villages covered under 3G/4G connectivity, telemedicine can potentially fill healthcare access gaps in rural areas. But connectivity problems and variable internet speeds in remote locations continue to be major impediments. Investments in digital infrastructure and last-mile connectivity will be key to making sure that telemedicine is able to achieve its full potential. The drug industry is also seeing major changes, such as duty-free import of 36 life-saving medicines and higher spending on research and development. While these steps are meant to bring down the cost of medicines, inefficiencies in distribution are still restricting their availability in far-flung areas. These bottlenecks need to be addressed by making supply chain mechanisms stronger and ensuring a smooth distribution system.
Ageing population and the need for geriatric care
As India’s elderly population is projected to increase from 138 million in 2021 to 193.4 million by 2031, a 41 per cent rise, adequate geriatric care must become a priority. However, funding for elderly healthcare services remains limited, raising concerns about how the country will address the medical and social needs of its aging citizens. Formulation of a comprehensive health strategy for geriatrics, incorporating home care, specialised institutions, and funding for elderly citizens, is essential for the coming years. While vaccination and disease prevention initiatives remain a critical component of India's healthcare policy, their effectiveness is usually undermined by gaps in implementation. Moreover, tackling the social determinants of health like access to clean water, sanitation, and nutrition is an incomplete agenda. With 35 million individuals still without access to safe drinking water and 678 million without access to safe sanitation facilities, the connection between public health and infrastructure development cannot be overlooked.
Balancing medical tourism with domestic health care needs
Internationally, India is aligning itself to be a worldwide medical tourism centre under its 'Heal in India' drive. The industry has the potential to expand to $13 billion by 2026, creating a huge economic opportunity. Increasingly, it is feared that emphasizing medical tourism would distract focus and resources away from domestic healthcare priorities, especially rural and underserved areas. Achieving a balance between encouraging medical tourism and providing accessible, good-quality care for Indian citizens will be a key to sustainable growth.
The way forward
The way to equitable healthcare in India will require a multi-faceted strategy that bridges gaps in infrastructure, insurance, human resources, and digital health. Increasing health insurance coverage for services beyond hospitalization, including outpatient care, diagnostics, and medicines, would reduce economic pressures on millions. Rural healthcare strengthening needs more than budget releases; it needs strategic planning of the workforce, competitive incentives, and policy interventions that induce doctors to work in rural areas. Investments in digital infrastructure must be cantered on enhancing last-mile connectivity so as to unlock the full potential of telemedicine, while efficiencies in pharmaceutical supply chains need to be maximized to provide timely access to critical drugs. Preparing for an ageing population means strengthening geriatric care frameworks, implementing home-based models of care, and placing priority on social welfare programs. Finally, as much as medical tourism has economic benefits, it should not dominate local healthcare agendas. India's path to Universal Health Coverage is contingent upon ongoing efforts, multi-sectoral partnership, and an undertaking to eliminate systemic inequities to make healthcare accessible for all.
Dr Monika Kochar is adviser health and Tanya Singh is research assistant at DAKSHIN-Global South Centre of Excellence.