New Delhi: Finance minister Nirmala Sitharaman’s 2025-26 budget speech gave more attention to health announcements than the previous year.
One such announcement was exempting 36 medicines from customs duty. These are medicines that are consumed by patients suffering from rare diseases. The customs duty – a tax levied on import and export – on these medicines was 10%.
This appears to be a proposal to alleviate the problems of patients.
But Purva Mital, who suffers from Spinal Muscular Atrophy (SMA), a rare disease, says that those who believe in the ‘progressiveness’ of this announcement are delusional.
The SMA causes muscle weakness in arms, legs, face, chest, throat, and tongue. This severely impacts all day-to-day activities. Risdipalm is a drug that can help patients like her. She says the annual expenditure of purchasing this drug is about Rs 72 lakh.
“How do you think a 10% discount, if at all companies decide to pass the relief on to the consumers, is going to make a difference in our lives?” she told The Wire on February 1, 2025.
According to one estimate, 70-96 million people are suffering from various rare diseases in India and their annual expenditure on drugs runs into several lakhs.
Mital, 32, is a government employee based in Delhi who also suffers from SMA. When asked if this discount would in any small way give her better access to the drug, she replied, “I have never purchased this drug in the first place because neither my family nor I could ever afford to spend Rs 72 lakh per year.” Her condition will worsen in absence of consumption of this drug.
“This drug is not manufactured in India,” said K.M. Gopakumar who is associated with the non-profit Third World Network (TWN) which advocates for making the prices of drugs affordable.
“If the intent in the budget was to make the lives of these patients easier, then this spirit has to find a match in policy making, to encourage local production of this drug. Without this, today’s announcement [the budget speech of February 1] is just tokenism with little effect,” he added.
While presenting the budget for the last year, the finance minister had exempted four drugs for cancer patients from the GST. These were trastuzumab, deruxtecan, osimertinib and durvalumab.
“We have no evidence, yet, to conclude if this move made the lives of cancer patients easier to a significant extent,” Gopakumar said.
The other major announcement in the finance minister’s speech was adding 10,000 more undergraduate and postgraduate medical education seats.
“In the next year, 10,000 additional seats will be added in medical colleges and hospitals, towards the goal of adding 75,000 seats in the next 5 years,” she said. The minister also said the Narendra-Modi government had added 1 lakh MBBS and post-graduate seats in the last 10 years.
This announcement does not seem to be addressing the concern that the Economic Survey 2024-25, released a day before the Budget, raised. It essentially cast doubts over the quality of the medical education being imparted with the number of seats rapidly increasing.
The Survey said despite several measures of the National Medical Commission, the “issues like shortage of faculty, ghost faculty, low patient load in hospitals continue to affect the quality of training.” Low patient loads deprive budding doctors of an opportunity to treat patients coming with different kinds of diseases to gain better understanding.
The Survey also pointed out the exorbitant fee in private colleges for MBBS courses which range from Rs 60 lakh to Rs 1 crore. As many as 48% of all the medical seats are in the private sector.
So while the Economic Survey prepared by Sitharaman’s ministry cautions about declining standards in medical education, she, in her budget, announced an increase in the seats without addressing the core issue in this area.
The Economic Survey 2024-25, just like its previous edition, gave substantial space to mental health. Various aspects of it were discussed in detail in four pages of the Survey tabled this year. Therefore, one expected that the trend of decreasing the allocation to mental health, which happened in the last Budget, would be reversed this year.
But for FY 2025-26, too, the money earmarked to at least two programmes for mental health went down. One of them is the National Tele Mental Health Programme – a 24×7 tele-mental health counselling service. Its outlay for FY 25-26 decreased 16% compared to the financial previous year.
Similarly, National Institute of Mental Health and Neuro-Sciences (NIMHANS) saw a 4.5% decrease. It is a premier institute catering to patients of mental illnesses.
Health spending
The health ministry comprises two departments – department of family and health welfare, and the department of health research. The former executes all health policies of the country while the latter is exclusively dedicated to health research.
The outlay to the department of health and family welfare for FY 2025-26 is Rs 95,957.87 crore. The budget estimates (BE) for FY 2024-25 was Rs 87,656.90 crore. When adjusted for inflation of 6.5%, the overall allocation for the department of health and family welfare increased by 3%.
Even though the allocation for this department has gone up in nominal numbers in the last several years, when adjusted for inflation, there used to be a decline in the real numbers. The budget earmarked for FY 2025-26 has reversed the trend of at least the last three years, when real numbers also increased – and not just the nominal numbers.
Notes: All the calculations comparing budget estimates for FY 2025-26 and FY 2024-25 have been adjusted for 6.5% inflation. In other words, the inflation rate has been added to the BEs for FY 2024-25 to arrive at the real numbers and compare them with the allocations of FY 2025-26.
The table titled ‘health budget at a glance’ gives details how these calculations were arrived at.
The budget allocated to Pradhan Mantri Jan Arogya Yojana (PMJAY-Ayushman Bharat) went up by 20%. This outlay for this scheme has been consistently increased in the last several years despite not-so-adequate utilisation of the budget. But one of the additional reasons, which could be responsible for this hike this year, could be expansion of the ambit of this scheme that was announced in the second half of the last year.
Initially, the scheme provided an insurance cover of Rs 5 lakh every year per family to meet hospitalisation needs. This scheme has now been expanded for ASHA workers and ANMs, and 4.5 crore senior citizens, over and above the family cover. The scheme covers only in-patient admissions.
Just like Ayushman Bharat scheme, Pradhan Mantri Ayushman Bharat Health Infrastructure Mission (PM-ABHIM) is a flagship programme of the Narendra Modi government. Both are centrally sponsored schemes – 60% of the funding comes from the Union government and rest from the state governments. As for north-eastern states, the ratio is 90:10.
As much as 20% more money was allocated to PM-ABHIM for FY 2025-26 as compared to the previous fiscal year. PM-ABHIM focuses on developing capacities of health systems and institutions at primary, secondary and tertiary levels to prepare health systems in responding effectively to the current and future pandemics or disasters.
This increase for the scheme came despite two parliamentary committee reports which revealed that the state governments have failed to fully utilise the quantum of money given by the Union government.
One separate component of this scheme is PM-ABHIM (health). It focuses on health services while PM-ABHIM is the broader initiative. The former’s allocation has been decreased for FY 2025-26 by 5.4%.
The allocation to theNational Health Mission (NHM) went down by 3%. This umbrella programme plays the most crucial role in addressing the needs of rural healthcare. Maternal and child health programmes form the bulk of the NHM. The other areas are: non-communicable (lifestyle) diseases programme, communicable diseases programme, health systems strengthening and infrastructure maintenance.
Indranil Mukopadhyay, a health economist and a professor at O.P. Jindal University, said this development was worrisome. “In the last few years we saw new and more programmes added to the NHM. For example, the health and wellness centres were also added to the NHM,” he said.
“While new components are being added, a decline in the budget for the NHM is also happening,” he added.
In so far as new AIIMS-like institutions are concerned, 5% more allocation was done for ‘Establishment Expenditure of New AIIMS’ scheme this fiscal year. This captures the capital expenditure of the scheme.
One component of Pardhan Mantri Swasthya Suraksha Yojana (PMSSY) also includes the spending on new AIIMS-like institutions to capture their revenue expenditure. The capital expenditure includes the spending on assets while the revenue expenditure includes the costs incurred on day-to-day activities.
Only six AIIMS-like institutions at Bhopal, Bhubaneswar, Jodhpur, Patna, Raipur and Rishikesh are fully functional. All of them were approved by the Atal Bihari Vajpayee government.
Twelve such institutions were approved by the Narendra Modi government. They are at Gorakhpur, Raebareli, Nagpur, Kalyani, Mangalagiri, Bibinagar, Bathinda, Deoghar, Bilaspur (Himachal Pradesh), Rajkot, Guwahati and Vijaypur have only OPDs functioning. They do not offer in-patient admission.
Some of these 12 institutions were sanctioned in 2014.
Besides OPD services, the institutions located at Rae Bareli, Kalyani, Mangalagiri, Bibinagar, Bilaspur, Bathinda and Deoghar offer in-patient admission services. Their counterparts at Gorakhpur and Nagpur started IPD services in January this year. The ones at Rajkot, Guwahati, Bilaspur (Himachal Pradesh) and Vijaypur offer only OPD services, the budget documents and the websites of these institutions reveal.
The other ones at Madurai, Darbhanga, Awantipura and Rewari are under various stages of construction and yet to begin any service.
The second component of PMSSY is the upgradation of various projects of existing government colleges in various stages. The overall allocation to PMSSY has been reduced by 6% for the next financial year.
The budget designated for AIIMS-Delhi and PGI-Chandigarh went up by 8% and 2.4%, respectively. The BE 2025-26 for National AIDS and Sexually Transmissible Diseases Control Programme has been increased by 5.6%.
Indian Council of Medical Research (ICMR) comes under the department of health research. The premier research institute of India was allocated 17.7% more funds in BE 2025-26 as compared to the previous year’s estimated expenditure.
This article was updated at 11:04 pm to reflect the correct status of eight AIIMS-like institutions.
