Ahead of the Union Budget 2026-27, industry experts and researchers have called for a significant increase in public healthcare spending, stressing the need for stronger funding, infrastructure development, and innovation support to address rising medical costs and widening inequality.
Union finance minister Nirmala Sitharaman will present the Budget, her ninth consecutive, on February 1. On Thursday she tabled the Economic Survey in parliament with projected growth for FY 27 at 6.8-7.2%.
India’s healthcare allocation has seen steady growth over the past five years, rising from RS 80,693.92 crore in FY21 to a budget estimate of Rs 99,858.56 crore for FY26. Despite this, experts warn that current spending remains insufficient given economic and social pressures driving up healthcare demand.
A recent academic study, Impact of Determinants of Healthcare Expenditure in India: The ARDL Bounds Testing Approach, published in the International Journal of Advanced Research (December 2025) and reported by PTI, analysed national data from 1991 to 2023. It found that per-capita income, urbanisation, secondary education enrolment, inflation, life expectancy, and per-capita health spending significantly influence both total healthcare expenditure and household out-of-pocket (OOP) payments.
The study highlights that while life expectancy and education are linked to lower per-capita total health expenditure, inflation, income growth, and urbanisation correlate with reduced OOP spending. It concludes that India’s limited public investment combined with heavy reliance on private payments disproportionately burdens rural households and economically weaker sections. “Without stronger public financing, the burden of illness continues to fall most heavily on those least able to afford it,” the paper states.
Industry leaders said these findings reinforce the need for budgetary reforms. Amit Mookim, Board Director and CEO of Immuneel Therapeutics, noted, “As India advances its ambition to become a global hub for next-generation biotherapies, the Union Budget 2026-27 can play a defining role in improving access, affordability, and innovation in cell and gene therapy.”
He suggested measures such as GST rationalisation on manufacturing inputs, import-duty relief, insurance coverage for one-time curative therapies like CAR-T, and regulatory clarity aligned with global standards.
Mayank Singhal, Vice Chairperson and Managing Director of PI Industries, called for stronger R&D support, AI-driven research platforms, and incentives for integrated drug discovery, underlining the importance of predictable fiscal and regulatory policies for competitiveness in innovative drug development.
The healthcare industry body NATHEALTH has urged the government to raise public healthcare spending to over 2.5 per cent of GDP, up from 1.9 per cent in FY24, and take urgent measures to address the rising burden of non-communicable diseases (NCDs), which account for nearly 65% of all deaths in India. The body recommended tax deductions of up to Rs 10,000 for preventive health check-ups and proposed the creation of a Rs 50,000 crore healthcare infrastructure fund to improve access to long-term, low-cost capital for hospitals and diagnostics.
The body also suggested a national network of accredited reference laboratories (Rs 1,000 crore) and an innovation fund of Rs 5,000–7,000 crore for deep-tech collaboration and provider partnerships.
“Healthcare must be recognised as a strategic pillar of nation-building to achieve the Viksit Bharat 2047 vision,” said NATHEALTH President Ameera Shah, with Senior Vice President Sangita Reddy adding that Budget 2026-27 should serve as a launchpad for bold, long-horizon investments to build a resilient, future-ready healthcare system.
Pharma and MedTech leaders echoed these calls. Dr Reddy’s Laboratories Chairman Satish Reddy highlighted the sector’s shift from volume-led to value-driven growth and the need for a structured funding framework to deepen R&D.
Himanshu Baid, MD of Poly Medicure Ltd, called for a dedicated Rs 1,000-crore MedTech R&D and clinical validation fund, while Dhaval Radia, CFO of ZEISS India, stressed the importance of customs duty rationalisation and simplified governance.
Preventive and AI-driven healthcare also featured prominently. Philips India Finance Head Dev Tripathy recommended incentives for AI-led innovation and global capability centres, while Apollo Hospitals’ Shobana Kamineni highlighted prevention-first healthcare models. Rainbow Children’s Medicare Chairman Ramesh Kancharla suggested tax deductions for essential diagnostics and annual check-ups to support early intervention.
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