According to the National Health Policy (2017), state governments in India still devote less than the suggested 8% of their budgets to their separate health and family welfare ministries. The average state-by-state allocation for healthcare is 6.2%, according to the 2024–25 Budget Estimates. Economists question whether public health financing is enough in light of this discrepancy between suggested policies and actual cash allocations.
According to data from the Institute for Policy Research Studies’ PRS Legislative Research, there are notable differences in healthcare spending between states. Delhi and Goa are two of the few states that spend more than the national average; Goa has reached the 8% goal. States like Uttar Pradesh, Bihar, and Madhya Pradesh, on the other hand, devote less than 6% of their budget to healthcare, indicating inequalities that may affect health outcomes, especially in underprivileged areas.
These discrepancies are also influenced by how different states categorise healthcare-related spending. For instance, expenditure on schools for underserved people is classified as welfare in Andhra Pradesh and Telangana rather than education or health. Similarly, Punjab classifies farmer electricity subsidies under agriculture rather than energy. The various ways that governments prioritise and report their budgets are reflected in these groupings.
Central programs like Ayushman Bharat and the National Health Mission have a big impact on healthcare financing by offering crucial assistance. States differ in the amount of support, nevertheless. Healthcare spending trends in Delhi are significantly different from those in other states since the Union government oversees police operations, and rural regions are sparse.
Many states need to acknowledge the significance of healthcare services, particularly for the development of human capital and the expansion of productivity. States run the danger of overspending on disease treatment if they don’t upgrade their healthcare infrastructure, which might only marginally lower death rates, according to Arup Mitra, an economics professor at South Asian University in New Delhi.
He continued that the low calibre of human capital would also make it difficult for states to draw in investment. Since it is the only viable route to long-term advancement and wealth, the relationship between health, productivity, and growth must be realised as soon as possible. India’s healthcare expenditures as of 2023 accounted for only 1.8% of GDP, far less than the 6% worldwide average. With an emphasis on enhancing basic healthcare, tackling non-communicable diseases (NCDs), and upgrading infrastructure, experts have advocated for raising this allocation to 2.5% of GDP.
“Current levels of public health funding remain inadequate to address critical issues such as the lack of healthcare infrastructure, the growing burden of both communicable and non-communicable diseases, and the need to ensure equitable access to quality care,” stated JVR Prasada Rao, a former secretary. The government’s inadequate focus on the health sector is shown in the stark disparities in health spending among states. Underserved and rural areas are especially susceptible to these deficiencies, running the danger of becoming even more marginalized,” he continued.
In India, the central government supports healthcare through Centrally Sponsored Schemes (CSS), which are a vital part of state budgets. Healthcare is one of the sectors that these programs are intended to address, both within the state and concurrent lists. The healthcare sector received 16% of the Rs 4.4 lakh billion in funds that the 15th Finance Commission should give local authorities between 2021–2022 and 2025–2026. These awards aimed to promote health and wellness centres and diagnostic infrastructure.
Under these funds, Rs 2.5 lakh crore was set aside for local authorities between 2021–2022 and 2023–2024; however, only around 80% of the suggested sum has been disbursed. While urban local bodies (ULBs) and the primary healthcare sector had delays in getting their share of funding, rural local bodies (RLBs) received almost 90% of their allotted grants.
