As the Indian government gets ready to announce the Union Budget 2026 on February 1, the healthcare sector is hopeful for an increase in government spending on healthcare to 2.5%-3% (a rise from the current rate of around 1.3%) of GDP, a demand that has persisted for many years.
Tushar Badjate, the Director of Badjate Stock & Shares Pvt Ltd, is of the opinion that since India’s healthcare expenditure is still under 2.5% of GDP, there is limited scope for complacency in the Union Budget.
In the National Health Policy 2017, the government aimed to raise public investment in healthcare to 2.5% of GDP by 2025; however, this goal has not been met, which experts believe contributes significantly to the country’s inadequate health infrastructure.
Additionally, healthcare analysts also foresee a focus on preventive care, mental health, and autonomy in medical technology, even with a medical inflation rate varying between 11.5% and 14%.
“This budget is expected to focus on higher public health allocation, preventive care, and capacity building. Policy support for pharma and medical devices, along with tax relief on health insurance, could materially improve access and strengthen the sector’s long-term growth trajectory,” added Badjate.
Further, Nitant Darekar, Research Analyst at Bonanza added that following transformative policy developments including the Sabka Bima Sabki Raksha Bill enabling 100% FDI in insurance and GST removal on premiums, the healthcare sector anticipates substantial budget allocations in 2025.
5 key areas to watch out in the healthcare sector
PLI schemes
Suresh Garg, the Founder and CMD of Zeon Lifesciences, stated that broadening the PLI schemes for nutraceuticals, adjusting the GST on raw materials such as botanical extracts, and aligning FSSAI approvals with global norms will promote domestic manufacturing and exports.
Garg is of the opinion that improved credit guarantees similar to ECLGS extensions, combined with R&D tax credits for advancements in probiotics and gut health, will enable MSMEs to automate and explore markets in the Middle East and Southeast Asia, thus making nutraceuticals a fundamental element of Viksit Bharat by 2047.
Public medical infrastructure
Aman Puri, the Founder of Steadfast Nutrition, stated that additional investments are necessary to address the gaps in the public medical infrastructure within the sector. There should be more financial support for the development and upkeep of primary and secondary healthcare facilities, particularly in rural regions and Tier 2 and Tier 3 cities, which are populated by low-income groups and represent 65% of India’s population.
At present, according to Puri, the majority of hospital capacity in these cities is provided by the private sector, making healthcare more costly and less accessible for these communities. There is also a significant shortage of healthcare professionals in the country.
Preventive healthcare
Although life expectancy has increased, the healthy life expectancy in the country continues to be inadequate and unequal. The emphasis is on treating illnesses, while preventive healthcare deserves equal consideration.
Aman Puri highlights that a less noticeable crisis involving non-communicable diseases (NCDs)—such as diabetes, hypertension, and cardiovascular diseases—is developing within the country.
To effectively address these issues before they escalate and place additional strain on families and the government, it is crucial to invest more in campaigns aimed at raising awareness, nutrition guidance programs, early detection efforts, disease surveillance, screenings, and management strategies, advises Puri.
Further, Nitant Darekar of Bonanza, added that the budget is anticipated to prioritise developing the remaining health and wellness centres from the projected 157,000, with a greater emphasis on preventative care infrastructure.
Medical devices manufacturing & telemedicine infrastructure
According to experts, an increased allocations toward medical devices manufacturing under “Make in India” to reduce import dependency.
Further, Nitant Darekar also said that given the projected increase in healthcare expenditures and ongoing initiatives, he anticipates announcement on universal health coverage timelines, tax incentives for health insurance enrolment, and strategic investment in telemedicine infrastructure to improve healthcare access in underserved communities.
Ayushman Bharat coverage
According to Nitant Darekar, the government plans to expand Ayushman Bharat coverage beyond the present framework, perhaps boosting the insured amount from ₹5 lakh to ₹10 lakh per household.
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