India continues to underspend on health, even as Budget 2026 signals intent through targeted schemes.

Rishiraj Bhagawati | February 2, 2026

India’s Union budget for 2026-27 contains several welcome announcements for health. But when viewed through a health equity lens, it also reveals familiar lines of tension, those of targeted relief and reformist intent on the one hand, and a continued reluctance to substantially expand public health financing on the other.

MoHFW has been allocated about ₹1.06 lakh crore for 2026-27, roughly a 6 percent increase over last year’s budget estimates and about 9 percent higher than the revised estimates. But in the context of a total Union budget of approximately ₹53.5 lakh crore, this still amounts to less than 2 percent of total government expenditure. In a country with one of the world’s highest burdens of disease and out-of-pocket health spending, this proportion remains strikingly low. Defence spending, just for instance, has seen a rise of over 15 percent when compared with the previous year’s budget estimate. Budgets after all are not just accounting exercises, they are statements of national priority.

With that said, some of this year’s health announcements appear to go beyond routine incrementalism.

One of the most immediately consequential measures is the full exemption of basic customs duty on 17 cancer-related drugs and medicines, with the expansion of the list of rare diseases eligible for duty-free import of drugs, medicines, and food for special medical purposes for personal use. For patients dealing with catastrophic health costs, particularly in oncology and rare diseases, such measures can reduce the landed cost of treatment and ease financial pressure. In a system where high-end therapies are often imported and paid for out of pocket, this can be a meaningful intervention.

The Budget also makes a pitch for strengthening India’s biomedical and regulatory ecosystem. The proposed creation of a nationwide network of 1,000 accredited clinical trial sites, along with investments to upgrade the drug regulatory system, signals ambition to position India as a credible global site for clinical research and innovation. Combined with longer-term investments in biologics and biosimilars, this could enhance domestic manufacturing capacity and scientific credibility, provided ethical oversight, transparency and patient safety are treated as non-negotiable public goods and not procedural hurdles.

On the service delivery side, the government has tried to address human resource stresses. A phased allocation of close to ₹1,000 crore over three years aims to expand and train allied healthcare professionals, including a cadre of geriatric caregivers. There is also a proposal to roll out national skills qualification framework-aligned programmes to train multi-skilled caregivers combining core care work with allied capabilities such as wellness and yoga, unsurprising with this government’s priorities with AYUSH. In parallel, district hospitals are to be strengthened with emergency and trauma care facilities, and there seems to be another push to expand seats in MBBS, postgraduate, superspeciality and nursing education to address long-term workforce shortages.

Taken together, these measures reflect on paper a recognition of several real gaps in India’s fragile health system, including the shortage of trained personnel, the need to prepare for an ageing population, and the importance of research, regulation and manufacturing capacity. But from a right-to-health perspective, it is not enough to list initiatives of course - the harder question is whether these measures are likely to translate into equitable access and durable public capacity.

Consider the duty exemptions on cancer and rare-disease therapies. While they can reduce drug prices, their real impact will depend on whether these savings are passed on to patients, whether hospitals revise package rates, and whether diagnostics, hospital care and follow-up services are accessible in the first place. Without stronger public provisioning and financial protection, such relief risks benefiting primarily those already able to reach tertiary facilities.

Also, the expansion of clinical trial infrastructure and regulatory capacity is promising but only if accompanied by robust ethics oversight and clear accountability. Scaling research quickly without strengthening governance can deepen inequities rather than reduce them, particularly when vulnerable populations are involved and at high risk.

The push to train allied health professionals and caregivers is perhaps one of the most equity-relevant announcements. Yet training alone does not guarantee availability where care is needed most. Without decent pay, job security, safe working conditions and incentives for rural and underserved postings, new cadres risk being absorbed into urban, private markets, leaving public facilities still short-staffed.

These implementation risks bring me to the Budget’s central limitation - the scale of public health financing remains insufficient. Another year, same gap. Even with modest increases, health spending continues to hover at under 2 per cent of total government expenditure. This constraint can shape everything else. Primary healthcare, the foundation of universal health coverage, continues to rely on allocations that are modest relative to need. National Health Mission funding remains stretched across states with vastly different disease burdens and capacities, while insurance-based schemes receive attention without a commensurate expansion of public service delivery.

From a constitutional standpoint, this matters. Indian courts have repeatedly read the right to health into the right to life under Article 21. But rights are not realised through schemes alone. They require predictable public financing, strong institutions, and regulation that balances patient need with market incentives.

The growing role of the private sector in healthcare delivery highlights this further. Innovation and investment are valuable but without firm regulation on pricing, quality, standard treatment guidelines and grievance redress, they can widen existing inequities. A right-to-health framework demands that the state act not only as a purchaser or facilitator of care, but as a provider and regulator with clear obligations.

What, then, would a more rights-aligned path look like?

First, a credible medium-term commitment to increasing public health spending with transparent milestones, rather than year-to-year marginal increases. Second, a deliberate recentring of primary healthcare and district hospitals as the backbone of the health system, backed by assured funding for medicines, diagnostics and human resources in underserved areas. Third, a workforce strategy that links training with retention, through pay, career progression and rural incentives. And fourth, a regulatory approach that balances innovation with patient protection, ensuring that affordability and access keep pace with scientific advancement and market allures.