Ahead of the Union Budget 2026-27, healthcare industry experts and academic researchers have issued a strong call for substantially increased public healthcare spending. They emphasize the urgent need for enhanced funding, infrastructure development, and innovation support to tackle escalating medical costs and growing socioeconomic disparities in access to care.
Budget Context and Economic Backdrop
Union Finance Minister Nirmala Sitharaman is scheduled to present the Budget, marking her ninth consecutive presentation, on February 1. This follows her tabling of the Economic Survey in Parliament, which projects India's growth for FY27 at a promising 6.8-7.2%. Despite this positive economic outlook, the healthcare sector remains under significant strain.
Historical Spending Trends and Current Gaps
India's healthcare allocation has demonstrated steady growth over the past five fiscal years, increasing from Rs 80,693.92 crore in FY21 to a budget estimate of Rs 99,858.56 crore for FY26. However, industry analysts and experts unanimously warn that this incremental growth remains critically insufficient. They point to mounting economic pressures and social challenges that are dramatically driving up healthcare demand across the nation.
Academic Research Highlights Systemic Issues
A recent academic study titled Impact of Determinants of Healthcare Expenditure in India: The ARDL Bounds Testing Approach, published in the International Journal of Advanced Research in December 2025 and reported by PTI, provides crucial insights. The research analyzed comprehensive national data spanning from 1991 to 2023.
The study identified several key factors significantly influencing both total healthcare expenditure and household out-of-pocket payments:
- Per-capita income levels
- Urbanization rates
- Secondary education enrolment
- Inflation trends
- Life expectancy improvements
- Per-capita health spending patterns
Interestingly, the research found that while increased life expectancy and education are associated with lower per-capita total health expenditure, factors like inflation, income growth, and urbanization correlate with reduced out-of-pocket spending. The study concludes that India's limited public investment, combined with heavy reliance on private payments, disproportionately burdens rural households and economically weaker sections of society.
The paper states clearly: "Without stronger public financing, the burden of illness continues to fall most heavily on those least able to afford it."
Industry Leaders Advocate for Budgetary Reforms
Healthcare industry leaders say these research findings strongly reinforce the need for comprehensive budgetary reforms. Amit Mookim, Board Director and CEO of Immuneel Therapeutics, emphasized the strategic opportunity: "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 proposed several specific measures including:
- GST rationalization on manufacturing inputs
- Import-duty relief for critical medical components
- Insurance coverage for one-time curative therapies like CAR-T
- Regulatory clarity aligned with global standards
R&D and Innovation Focus
Mayank Singhal, Vice Chairperson and Managing Director of PI Industries, called for stronger research and development support, advocating for AI-driven research platforms and incentives for integrated drug discovery. He underlined the importance of predictable fiscal and regulatory policies for maintaining competitiveness in innovative drug development.
NATHEALTH's Comprehensive Recommendations
The healthcare industry body NATHEALTH has presented detailed recommendations to the government, urging a substantial increase in public healthcare spending to over 2.5 percent of GDP, up from 1.9 percent in FY24. The organization also emphasized urgent measures to address the rising burden of non-communicable diseases, which account for nearly 65% of all deaths in India.
NATHEALTH's specific proposals include:
- Tax deductions of up to Rs 10,000 for preventive health check-ups
- Creation of a Rs 50,000 crore healthcare infrastructure fund to improve access to long-term, low-cost capital for hospitals and diagnostics
- Establishment of a national network of accredited reference laboratories with Rs 1,000 crore funding
- An innovation fund of Rs 5,000–7,000 crore for deep-tech collaboration and provider partnerships
NATHEALTH President Ameera Shah stated: "Healthcare must be recognised as a strategic pillar of nation-building to achieve the Viksit Bharat 2047 vision." Senior Vice President Sangita Reddy added 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 Sector Perspectives
Pharmaceutical and medical technology leaders have echoed these calls for enhanced support. Dr. Reddy's Laboratories Chairman Satish Reddy highlighted the sector's strategic shift from volume-led to value-driven growth, emphasizing the need for a structured funding framework to deepen research and development initiatives.
Himanshu Baid, Managing Director of Poly Medicure Ltd, called for a dedicated Rs 1,000-crore MedTech R&D and clinical validation fund. Dhaval Radia, CFO of ZEISS India, stressed the importance of customs duty rationalization and simplified governance procedures to facilitate smoother operations.
Preventive and AI-Driven Healthcare Emphasis
The conversation around preventive healthcare and artificial intelligence integration featured prominently in industry recommendations. Philips India Finance Head Dev Tripathy recommended specific incentives for AI-led innovation and global capability centers. Apollo Hospitals' Shobana Kamineni highlighted the importance of prevention-first healthcare models in reducing long-term system burdens.
Rainbow Children's Medicare Chairman Ramesh Kancharla suggested additional tax deductions for essential diagnostics and annual check-ups to support early intervention strategies, emphasizing that preventive measures could significantly reduce future healthcare costs.
As the Union Budget 2026-27 approaches, the healthcare sector's collective voice grows stronger, presenting a comprehensive case for transformative investment in India's medical infrastructure, research capabilities, and accessibility frameworks. The coming budget presentation will reveal how these urgent recommendations translate into actionable policy and funding decisions.
