Healthcare Spending in India Falls Short of National Health Policy Recommendations

The latest Budget Estimates for 2024-25 reveal that the average healthcare allocation by states is 6.2%, significantly below the prescribed target.

State governments across India continue to allocate less than the recommended 8% of their budgets to health and family welfare departments, as outlined in the National Health Policy (2017).

The latest Budget Estimates for 2024-25 reveal that the average healthcare allocation by states is 6.2%, significantly below the prescribed target.

Economists and public health experts are raising concerns about the adequacy of public health funding and its long-term implications.

Healthcare Funding Gaps & Disparities

Data from PRS Legislative Research highlights stark variations in healthcare spending across states. Goa is among the few states meeting the 8% benchmark, while Delhi exceeds the national average.

In stark contrast, Uttar Pradesh, Bihar, and Madhya Pradesh allocate less than 6% of their budgets to health, raising concerns about disparities in healthcare access and outcomes.

Variations in how states classify expenditures also play a role in the observed differences. Andhra Pradesh and Telangana, for instance, classify spending on schools for marginalized communities as welfare rather than education or health.

Similarly, Punjab categorizes electricity subsidies for farmers under agriculture instead of energy. These classification practices reflect diverse priorities but can obscure healthcare funding assessments.

Role of Central Schemes in Healthcare

Centrally Sponsored Schemes (CSS), such as Ayushman Bharat and the National Health Mission (NHM), provide critical support to state healthcare systems. However, the impact of these schemes varies.

In Delhi, where rural healthcare needs are minimal and police functions are managed by the Union government, healthcare funding patterns differ significantly from states with larger rural populations.

The 15th Finance Commission allocated INR 4.4 lakh Cr in grants for local bodies from 2021-22 to 2025-26, with 16% designated for healthcare infrastructure.

Between 2021-22 and 2023-24, INR 2.5 lakh Cr was earmarked for local bodies, but only 80% of the amount has been disbursed.

While rural local bodies (RLBs) received over 90% of their allocated funds, urban local bodies (ULBs) and the primary healthcare sector faced delays, impeding progress in critical areas like diagnostics and health and wellness centers.

India faces critical challenges in addressing healthcare disparities and strengthening its public health infrastructure. The growing burden of both communicable and non-communicable diseases, coupled with inadequate infrastructure, underscores the need for equitable access to quality care.

Experts argue that meeting the 8% target for state health budgets and increasing national healthcare spending to 2.5% of GDP are essential steps toward building a robust healthcare system.

Expedited disbursement of grants to urban local bodies and primary healthcare sectors, along with transparent budget classifications, can ensure better resource utilization.

As India grapples with these challenges, ensuring adequate funding and prioritization in healthcare remains a critical determinant of the country’s socio-economic progress.

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