From Nimhans 2.0 to biopharma, Budget 2026 reshapes health priorities

Budget 2026 puts mental health, biopharma manufacturing and medical skilling at the centre, with Nimhans 2.0 and drug affordability shaping a broader healthcare realignment

Public healthcare allocation has edged up in the Union Budget 2026–27, with the total health budget rising to ₹1,16,870.58 crore, compared with ₹1,09,120.18 crore in the Budget Estimate (BE) for 2025–26. This represents a year-on-year increase of about 7 per cent, signalling growth in government health expenditure.

 

Notably, the Revised Estimate (RE) for 2025–26 at ₹1,04,895.02 crore is about 3.9 per cent lower than the Budget Estimate of ₹1,09,120.18 crore. A lower RE typically indicates slower-than-expected spending or deferment of some allocations during the year.

 

The Union Budget for 2024–25 had allocated ₹98,761 crore to the health sector, but actual expenditure stood lower at ₹96,969.49 crore, marking a shortfall of about 1.8 per cent. This gap suggests underutilisation of funds or delays in implementation during the year, pointing to execution bottlenecks rather than a dilution of policy intent.

 

 

Overall, the composition of spending in Budget 2026 points to a policy pivot towards mental health infrastructure, biopharma manufacturing, allied health skilling and targeted relief for high-cost treatments.

  Total health budget: Department-wise allocations (in ₹ crore) 

Ministry	Department	Actuals 2024–25	BE 2025–26	RE 2025–26	BE 2026–27
Ministry of health & family welfare	Department of health & family welfare	87,300.17	95,957.87	92,925.86	1,01,709.22
	Department of health research	3,383.93	3,900.69	3,927.64	4,821.21
Ministry of AYUSH	AYUSH	3,312.05	3,992.90	3,671.82	4,408.93
Ministry of chemicals & fertilisers	Department of pharmaceuticals	2,973.34	5,268.72	4,369.70	5,931.22
Total health budget	—	96,969.49	1,09,120.18	1,04,895.02	1,168,70.58

Source: Union Budget 2026-27, Ministry of Finance, Government of India 

Budget 2026 health allocation: Where the money is going

The Department of Health and Family Welfare, which funds core public health services, continues to account for the bulk of the allocation. Its outlay rises to ₹1,01,709.22 crore in BE 2026–27, up from ₹95,957.87 crore in BE 2025–26. The increase broadly tracks spending on ongoing schemes such as the National Health Mission, Ayushman Bharat, hospital infrastructure and emergency care.

 

The Department of Health Research, which houses the Indian Council of Medical Research, also sees a notable jump. Its allocation rises to ₹4,821.21 crore from ₹3,900.69 crore in BE 2025–26, underscoring the government’s emphasis on medical research, clinical trials and innovation-led capacity building.

 

The Ministry of AYUSH receives ₹4,408.93 crore, up from ₹3,992.90 crore a year earlier, aligning with the government’s push to position traditional medicine as part of India’s global healthcare offering.

 

Meanwhile, the allocation for the Department of Pharmaceuticals in 2026–27 records one of the faster growth rates, rising to ₹5,931.22 crore from ₹5,268.72 crore in BE 2025–26. This comes as Finance Minister Nirmala Sitharaman announced the rollout of large biopharma initiatives during her Budget speech in Parliament.

Budget 2026 mental health push: Nimhans 2.0 and regional centres

A key announcement in the Budget is the decision to set up Nimhans 2.0 (National Institute of Mental Health and Neuro Sciences 2.0) in North India, addressing a long-standing gap in access to national-level mental health institutions. The government will also upgrade existing mental health institutes in Ranchi and Tezpur as regional apex centres.

Emergency and trauma care expansion under Budget 2026

The government has announced an expansion in emergency and trauma care capacity in district hospitals through the creation of dedicated trauma centres. The move is aimed at improving access to 24×7 emergency services and reducing out-of-pocket expenditure during medical emergencies, particularly for poorer households.

Budget 2026 relief for cancer and rare disease patients

In one of the most immediate patient-facing measures, the Budget proposes a full exemption of basic customs duty on 17 life-saving drugs and medicines. In addition, seven more rare diseases have been brought under the ambit of import duty exemptions for medicines, medical foods and special formulations imported for personal use.

 

The relief is expected to lower treatment costs for patients dependent on imported therapies, though it stops short of broader reforms in cancer financing.

BioPharma Shakti and the biopharma manufacturing push

Reinforcing its longer-term strategy, the government has announced ‘BioPharma Shakti’, a ₹10,000-crore initiative spread over five years, aimed at building domestic capacity in biologics and biosimilars. The programme seeks to reduce import dependence, improve affordability and position India as a global biopharma manufacturing hub.

 

As part of this push, the Budget proposes setting up three new National Institutes of Pharmaceutical Education and Research, upgrading seven existing ones, and creating a network of 1,000 accredited clinical trial sites across the country.

Skilling allied health professionals under Budget 2026

Healthcare skilling figures prominently in Budget 2026. Existing institutions for Allied Health Professionals will be upgraded, and new ones will be established in both public and private sectors. The government aims to add one hundred thousand allied health professionals over the next five years across disciplines such as optometry, radiology, anaesthesia, applied psychology and behavioural health.

 

In addition, 150,000 caregivers will be trained in the coming year, focusing on geriatric care, wellness, yoga and assistive medical devices, addressing workforce gaps as India’s population ages.

Medical tourism and integrated healthcare hubs

To promote India as a destination for medical tourism, the Budget proposes support for states to set up five regional medical hubs in partnership with the private sector. These hubs will integrate modern medical care with AYUSH centres, diagnostics, rehabilitation, education and research facilities, creating both healthcare and employment opportunities.

 

Taken together, Budget 2026 marks a clear push towards institutional capacity, research, skilled manpower and domestic manufacturing in the health sector.