Union Budget 2026 Puts Healthcare at Centre, Health Allocation Up Nearly 10%

The Union Budget 2026-27, presented on February 1, has placed healthcare at the heart of India’s development agenda, announcing a strong push towards mental health services, affordable treatment for cancer and rare diseases, and a strategic roadmap to position India as a global bio-pharma manufacturing hub.

According to the budget announcement, the Ministry of Health and Family Welfare has been allocated ₹71,06,530.4 crore, marking nearly a 10 per cent increase over the revised estimates of the previous financial year. The latest hike reflects a cumulative growth of over 194 per cent in health spending since 2014–15, signalling a long-term commitment towards universal, affordable, and future-ready healthcare.

Healthcare Infrastructure Gets Major Boost

One of the key highlights of the budget is the sharp increase in allocation for the Pradhan Mantri Ayushman Bharat Health Infrastructure Mission (PM-ABHIM). The mission has been allotted ₹74,770 crore, nearly 68 per cent higher than last year. The funds will be utilised for expanding critical care blocks, integrated public health laboratories, district and sub-district hospitals, and other essential healthcare facilities across the country.

The government has also announced investments aimed at the modernisation and expansion of existing healthcare facilities, along with strengthening trauma and emergency care services nationwide. Under the new plan, trauma centres are proposed to be set up in every district hospital to ensure affordable 24×7 emergency care for all.

Key Budget Highlights

• Health budget records over 194% cumulative growth in the last 12 years

• PM-ABHIM allocation surges by 67.66% to ₹74,770 crore in BE 2026-27

• PMSSY allocation for FY 2026-27 increased to ₹11,307 crore, up by ₹407 crore

• NACO allocation raised to ₹3,477 crore, registering a 30.64% increase

• Department of Health Research allocation enhanced to over ₹4,821 crore

• Launch of ‘Bio Pharma Shakti’ with ₹10,000 crore funding over five years

• Reduction in customs duty on cancer and rare disease drugs

• Expansion of allied health institutions and regional medical hubs

Boost to Medical Education and AIIMS Network

Medical education has been given renewed focus in the budget. Under the Pradhan Mantri Swasthya Suraksha Yojana (PMSSY), ₹11,307 crore has been allocated for FY 2026-27. The funds will support the establishment of new AIIMS, the operationalisation of existing institutions, and the upgradation of government medical colleges.

In addition, a phased ₹7,980-crore plan over three years has been proposed to expand allied and healthcare professional education. The initiative aims to train one lakh skilled professionals over the next five years and nearly 1.5 lakh geriatric caregivers to meet the growing long-term care needs of India’s elderly population.

Research, Biopharma, and Digital Health in Focus

The Union Budget 2026-27 places strong emphasis on medical research and innovation. The Department of Health Research has been allocated ₹4,821 crore, while funding for the Indian Council of Medical Research (ICMR) has been increased to ₹4,000 crore.

A major highlight is the launch of the ‘Bio Pharma Shakti’ initiative, funded with ₹10,000 crore over five years. The programme aims to boost domestic production of biologics and biosimilars, reduce import dependence, and strengthen India’s position as a global biopharma hub. The initiative will also establish three new National Institutes of Pharmaceutical Education and Research (NIPERs), upgrade seven existing ones, and create a national network of 1,000 accredited clinical trial sites.

Digital healthcare has also received a boost, with the Ayushman Bharat Digital Mission allocation increased to ₹3,750 crore to expand digital health records, telemedicine services, and hospital information systems.

Lower Treatment Costs and Focus on Mental Health

To reduce the financial burden on patients, the budget proposes full customs duty exemption on 17 life-saving drugs and duty relief for medicines used in seven rare diseases, particularly benefiting cancer patients.

Mental health has emerged as a key priority area, with proposals to upgrade premier institutions in Ranchi and Tezpur and establish a NIMHANS-like institute in North India. The government has also announced steps to strengthen the Central Drugs Standard Control Organisation (CDSCO) to enhance drug regulation and promote pharmaceutical research and development.