Budget 2026: With under 2% of GDP, India's health spending lags global norms

India's public health spending remains below 2% of GDP, far lower than global standards and middle-income peers. As disease burdens rise, experts ask if underfunding health is now an economic risk

Public health spending in India remains under 2 per cent of GDP, despite repeated commitments to raise allocations. With non-communicable diseases rising and out-of-pocket medical costs still high, the upcoming Union Budget is being closely watched for signals on whether health will finally receive a sustained funding push.

 

Even as India’s economy has expanded and health needs have grown more complex, public health spending has stubbornly stayed around 1.8–2.0 per cent of GDP in recent years, according to the latest National Health Accounts (NHA) estimates released by the health ministry and the Economic Survey 2023-24 released by the Ministry of Finance. While this marks a gradual rise from about 1.3 per cent a decade ago, the pace has been slow, and the gap with global norms remains wide.

 

The Economic Survey 2024-25 notes that India’s total health expenditure (public + private) in 2021-22 was about ₹9.04 trillion, or around 3.8 per cent of GDP and ₹6,602 per capita at current prices. Of this, government health expenditure increased its share in total health expenditure from 29 per cent in 2014-15 to 48 per cent in 2021-22, indicating a rising role of public funds. 

What do global standards say about health spending? 

The World Health Organization (WHO) has stated that countries aiming for universal health coverage (UHC) should spend at least 5 per cent of GDP in public funds on health. Although this is not an official recommendation of the global health agency on health spending, it is an important indicator that it says needs to be monitored.

 

WHO treats it as a minimum threshold needed to: 

• reduce out-of-pocket medical expenses, 
• ensure access to primary and preventive care, 
• and maintain a stable health workforce. 

India’s spending level, less than half of this benchmark, puts it in a structural deficit zone. 

How does India compare with countries at similar income levels? 

India’s low public spending on health looks even more striking when compared with countries that have similar or only slightly higher per-capita incomes.

 

Countries such as Vietnam, the Philippines and Indonesia, which fall in a comparable lower-middle to middle-income bracket, spend a higher share of GDP on public health than India. Vietnam’s government health expenditure is estimated at around 3 per cent of GDP, while the Philippines and Indonesia spend between 2.5 per cent and 3 per cent. These levels are still below the benchmark WHO says to monitor, but significantly higher than India’s sub-2 per cent spending.

 

Some middle-income peers have gone further. Thailand, with a per-capita income only modestly higher than India’s, spends around 4.5–5 per cent of GDP publicly on health and has achieved near-universal health coverage. Brazil, another upper-middle-income country, also spends close to 4–5 per cent of GDP through its public health system.

 

Richer countries like the UK, Germany, France and Japan typically spend 6–9 per cent of GDP publicly on health, ensuring that healthcare access is largely insulated from personal income. Out-of-pocket expenses in these systems are often below 20 per cent of total health spending.

 

India, by contrast, continues to rely heavily on private spending, which translates into high out-of-pocket costs for households. 

What does the government say about the low spending levels? 

The Union government has consistently maintained that health spending is on an upward trajectory and that efficiency, not just allocation size, matters.

 

The National Health Policy 2017 set a target of raising public health expenditure to 2.5 per cent of GDP, though no fixed deadline was specified. Budget speeches in recent years have highlighted: 

• expansion of Health and Wellness Centres, 
• increased insurance coverage under Ayushman Bharat, 
• and investments in digital health infrastructure. 

Is underfunding health becoming a fiscal risk?

 

Health economists increasingly argue that chronic underinvestment in health creates future fiscal stress through: 

• rising burden of heart disease, diabetes and cancer, 
• productivity losses due to poor population health, 
• and higher long-term treatment costs for preventable illness. 

Principal advisor to India’s National Tuberculosis Elimination Programme and former Chief Scientist at the World Health Organization Dr Soumya Swaminathan has repeatedly warned that India’s health outcomes cannot improve meaningfully without a substantial rise in public financing. “India spends less than 2 per cent (of annual budget) on health while other Brics nations spend up to 8 per cent. India must spend more on healthcare,” she said in a recent interview, pointing out that public health expenditure remains far lower than in many comparable economies, even as disease burdens rise. She has stressed that technology and innovation alone cannot compensate for weak public investment in primary care and health systems.

 

Medical professionals echo this concern from the ground. Dr Dilip Bhanushali, president of the Indian Medical Association, has described India’s health spending levels as “alarmingly low”, arguing that inadequate public financing directly affects access, quality and affordability of care, particularly outside major cities.

 

As India heads into Budget 2026 with an ageing population, worsening air pollution and rising non-communicable diseases, the question is no longer whether health deserves more money, but whether the economy can afford continued underinvestment.  For more health updates, follow #HealthWithBS