NEW DELHI: The health sector received a 7 per cent increase in the Union Budget 2026, with a strong thrust on mental health, affordable cancer and rare disease treatment, and a strategic push to position India as a global bio-pharma manufacturing hub.
A key focus this year is the creation of a skilled healthcare workforce to address the country’s rising disease burden—particularly non-communicable diseases (NCDs) such as diabetes, cancer and autoimmune disorders—alongside the rapidly growing elderly population.
Notably, health research allocations rose by 24 per cent over the previous year.
“In terms of resource allocation, the total health budget, including health research, has witnessed a 7 per cent rise in the 2026–27 Budget Estimates compared with 2025–26,” said Dr Sarit Kumar Rout, Professor of Health Economics and Financing at the Indian Institute of Public Health, Bhubaneswar, PHFI.
Total allocations to the Ministry of Health and Family Welfare increased to Rs 1,01,709 crore in 2026–27 from Rs 95,957 crore last year, a rise of about 6 per cent. Funding for health research went up to Rs 4,821 crore, compared to Rs 3,900 crore in the previous Budget.
However, Dr Rout pointed out that despite the nominal increase, health expenditure as a share of the total government budget remains stagnant at around 2 per cent, unchanged for the last three years.
The Budget allocated Rs 39,390 crore to the National Health Mission (NHM) for 2026–27. While the programme continues to support outreach services, frontline worker training, maternity care and contraception, allocations for family welfare declined marginally—from Rs 1,536.97 crore to Rs 1,524.74 crore—and capital outlays for family welfare fell by 1.65 per cent.
“This is deeply concerning at a time when demographic trends show sharp regional variations in fertility and unmet need,” said Poonam Muttreja, Executive Director of the Population Foundation of India. “Reproductive choice cannot be sustained on stagnant or declining budgets.”
Welcoming measures aimed at affordability, Prof. K S Reddy, Chancellor of PHFI Institute of Public Health Sciences, said initiatives to reduce the cost of anti-cancer drugs were timely, especially with an ageing population driving higher cancer incidence. He also noted that the expanded focus on mental health addressed a long-standing unmet need.
Presenting the Budget in Parliament, Finance Minister Nirmala Sitharaman said India’s disease burden was steadily shifting towards NCDs. “Biological medicines are key to longevity and quality of life at affordable costs,” she said, announcing the Bio-pharma Shakti initiative with an outlay of Rs 10,000 crore over five years to boost domestic production of biologics and biosimilars.
To support research and innovation, the government will establish a network of 1,000 accredited clinical trial sites and strengthen the Central Drugs Standard Control Organisation (CDSCO) to meet global regulatory standards and faster approval timelines. The plan also includes a biopharma-focused network with three new National Institutes of Pharmaceutical Education and Research (NIPERs) and upgrades to seven existing ones.
The Budget also prioritised healthcare workforce development. Existing institutions for Allied Health Professionals (AHPs) will be upgraded, and new ones established across public and private sectors. These will cover 10 disciplines—including optometry, radiology, anaesthesia, OT technology, applied psychology and behavioural health—and add 1 lakh AHPs over the next five years.
A major push was announced for mental health, geriatric and trauma care. The government will set up a NIMHANS-2 in northern India, while National Mental Health Institutes in Ranchi and Tezpur will be upgraded as regional apex centres. To strengthen geriatric and allied care, 1.5 lakh caregivers will be trained in the coming year.
To address emergency healthcare gaps, especially for vulnerable populations, the Centre plans to increase Emergency and Trauma Care Centre capacity in district hospitals by 50 per cent.
Providing significant relief to patients, Sitharaman announced basic customs duty exemptions on 17 drugs, along with duty exemptions for seven additional rare diseases.
“The push for biosimilar production is timely,” Prof. Reddy said, adding that support for allied health training would help bridge workforce gaps in primary and secondary care. He noted that detailed programme-wise allocations were awaited for further assessment.
Industry stakeholders also welcomed the direction of the Budget. Dr Aashish Chaudhry, Managing Director of Aakash Healthcare, said the emphasis on biopharma, clinical trials, regulatory strengthening and research institutions would boost domestic capabilities and help establish India as a global biopharma hub. He added that plans for regional medical tourism hubs could enhance both patient care and international outreach.
The Budget also reinforced the government’s commitment to AYUSH systems, announcing three new All India Institutes of Ayurveda, upgrades to AYUSH pharmacies and drug testing labs, and enhanced training capacity. The WHO Global Traditional Medicine Centre in Jamnagar will also be upgraded to strengthen evidence-based research and awareness.
Dr Mukesh Batra, Founder-Chairman Emeritus of Dr Batra’s Healthcare, said the Budget marked a policy shift towards preventive and integrated healthcare beyond metros. He welcomed the proposal for five regional medical hubs with dedicated AYUSH centres offering diagnostics, rehabilitation and post-care services for chronic and lifestyle diseases, calling it a long-overdue step in improving continuity of care