Highlights Public spending on health is 1.8% of GDP, lower than the recommended level of 2.5%.  Out of pocket expenditure by individuals is 39% of total health expenditure. Shortages seen across both primary infrastructure and human resources. Schemes like the National Health Mission, PM-ABHIM, NHM (for primary health infrastructure), and PMSSY (setting up new AIIMS) saw under-utilisation in 2025-26.

Public health is an entry in the state list of the Constitution.  This means that the primary responsibility to provide health care lies with the state government.  The Union Ministry of Health and Family Welfare (MoHFW) formulates policies and schemes related to healthcare, and assists states in healthcare delivery.  The Ministry seeks to improve primary healthcare infrastructure through schemes like National Health Mission (NHM) and Pradhan Mantri Ayushman Bharat Infrastructure Mission (PM-ABHIM).  It supports medical education by funding institutions like All India Institute of Medical Science, Jawaharlal Institute of Postgraduate Medical Education and Research, etc.  It also seeks to reduce the financial burden of healthcare on individuals through insurance schemes like Pradhan Mantri Jan Arogya Yojna (PM-JAY).  The National Health Policy, 2017 which seeks to achieve universal health coverage, provides the policy framework for these schemes.

This note examines the allocation to the Ministry in year 2026-27.  The note also highlights some of the key challenges in the sector. 

Overview of finances

In 2026-27, the Ministry has been allocated Rs 1,06,530 crore.[i]  This is 10% higher than the revised estimates of 2025-26.  The Ministry has two departments: (i) Department of Health and Family Welfare, and (ii) Department of Health Research.  The Department of Health and Family Welfare receives 95% of the total budget allocation to the Ministry (see Table 1).

Table 1:  Expenditure of the Ministry (in Rs crore)

Department	2024-25 Actuals	2025-26 RE	2026-27 BE	Change RE to BE
Health and Family Welfare	87,300	92,926	1,01,709	9%
Health Research	3,384	3,928	4,821	23%
Total	90,684	96,854	1,06,530	10%

Note:  BE is Budgeted Estimates.  RE is Revised Estimates.
Sources:  Demand No. 46 and 47, Expenditure Budget 2026-27; PRS.

Announcement in the budget speech 2026-27 New Allied Health Professional institutions will be established in both public and private sectors. To promote medical tourism, five regional medical hubs will be established.  National Institute of Mental Health and Neuro Sciences will be established in northern India.

Of the total spending by the Ministry, 3% (Rs 2,928 crore) will be towards capital expenditure.1  This will include spending on establishment and upgradation hospitals and medical colleges. 

Trends in expenditure

Between 2016-17 and 2024-25, the compound annual growth rate (CAGR) of the Ministry’s expenditure is 12%.  CAGR is the annual growth rate over a certain period.  However, allocation in the union budget to the Ministry has decreased since 2019-20 (see Figure 1).  The Union government spent around 2% of its total expenditure towards health.

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