Recently, India achieved a historic feat by surpassing Japan as the fourth-largest economy in the world. However, in the midst of this celebration, a critical assessment of public health expenditure must be undertaken. While the expenditure on healthcare by developed countries stands at 10-11% of their GDP, the government expenditure on healthcare in India is stuck at 1.6-1.9%.
The Budget for 2026-27 has a pragmatic slogan: “optimisation over expansion.” Although there has been a modest increase in the allocation from ₹99,858 crore to ₹1,04,599 crore, the figures reveal a lot more. The government is changing its approach from “broad spending” to more targeted areas, such as Biopharma, Digital Health, and Skill Development, to derive better returns on spending.
The ₹10,000 crore ‘BioPharma Shakti’ scheme, in particular, reflects a long-term vision to transform India into a global biopharma manufacturing hub within the next five years. Given India's shifting disease burden—marked by non-communicable diseases such as diabetes, cancer, and heart conditions—achieving self-reliance in research and innovation is indeed the need of the hour.
However, the real challenge in the healthcare sector is not just the allocation of funds; it is the efficiency of utilisation. With rising medical inflation and the overuse of foreign technology, quality healthcare is becoming increasingly inaccessible for the middle class. It is a fact that close to 50% of the healthcare expenditure in India is still Out-of-Pocket, which puts millions of people at risk of poverty due to a medical emergency.
In this case, it is essential to look beyond the traditional reactive healthcare system, into a proactive ‘Preventive Care’ system. By doing so, we will be able to decrease the burden of disease significantly. But for this, we need to work on two fronts simultaneously: developing the Digital Health Infrastructure, and at the same time, improving the capabilities of our healthcare workforce.
Insurance as a safety net
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The ‘Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana’ (PMJAY) scheme, which benefits more than 10 crore families, is one of the most revolutionary steps taken in the recent history of the country. However, for this scheme to have a positive impact on the masses, the challenges in its implementation must be overcome.
The Budget for 2026-27 gives considerable importance to the improvement of public healthcare infrastructure, particularly through the enhancement of district hospitals and trauma care services. The choice to enhance emergency care services by as much as 50% in Eastern and North-Eastern states is a praiseworthy initiative to ensure better accessibility of healthcare services in the region.
Ultimately, this budget can be seen as a call to action for the government, the corporate world, startups, and healthcare professionals to come together as one. The agenda is still the same: providing quality, patient-centric care that is affordable.
Even with a limited resource base, India can move ahead with its head held high, paving the way for an inclusive and technology-enabled healthcare system that can compete in the global arena.
The author is an alumnus of IIM-Ahmedabad and the CEO of Starcare Hospital, Kozhikode.
The opinions expressed in this article are those of the author and do not purport to reflect the opinions or views of THE WEEK.