Public Health Financing -

Policy Commitments under National Health Policy, 2017

National Health Policy targeted government health spending at 2.5% of GDP by 2025.
Union government share was envisaged at 40% of total public health expenditure.
This required raising Centre’s allocation from 0.29% to nearly 1% of GDP.

Comparative and Structural Context

India’s public health spending remains low compared to regional and BRICS peers.
Bhutan spent 2.5 times more per capita, while Sri Lanka spent three times more in 2021.
Other BRICS nations recorded 14–15 times higher per capita health expenditure.
Thailand and Malaysia spent at least ten times more per capita than India.

State-Level Spending Trends

States and Union Territories increased allocations from 0.67% of GDP in 2017-18.
Health spending reached 1.1% of GDP in 2025-26 Budget Estimates.
Share of health in State budgets rose from 5% to 5.6%.
Pandemic-related increases were largely driven by States, not the Union government.

Union Government Allocation Patterns

Health and Education Cess Utilisation

Health and Education Cess introduced in 2018-19 at 4% of taxable income.
FY2023-24 collections reached ₹71,180 crore nationwide.
Only one-fourth, about ₹17,795 crore, was directed toward health spending.
Excluding cess, Union health allocation declined 22.5% in real terms since 2020-21.

Central Transfers and Scheme Funding

Union transfers to States for health schemes declined from 75.9% in 2014-15.
Transfers fell to 43% in 2024-25 Budget Estimates.
Trend reflects financial centralisation despite health being primarily a State responsibility.

Impact on Key Health Programmes

National Health Mission remains critical for rural and urban health service delivery.
NHM spending growth averaged 7.4% during FY14–FY19.
Real expenditure declined 5.5% during the second NDA tenure.
Schemes for nutrition, research, and health infrastructure faced notable budget reductions.

Public Health Financing