A new study ahead of Budget 2026-27 pushes for a significant rise in public healthcare expenditure to tackle rising medical costs and reduce inequality in access to care. Discover key findings, expert reactions, and implications for India’s health system.
The recent release of an academic report has reignited a long-standing debate regarding how India finances healthcare, particularly as we approach the Union Budget for FY 2026-2027. The study, released before the budget announcement, argues strongly for a major increase in public investment in healthcare, suggesting that existing levels of expenditure are inadequate to meet the needs of a changing society and the increased cost of access to medical care.
According to PTI, the paper Impact of Determinants of Healthcare Expenditure in India: The ARDL Bounds Testing Approach, which was published in the International Journal of Advanced Research in December, looks at national data from 1991 to 2023. It examines the factors that influence healthcare spending, including household out-of-pocket (OOP) payments as well as total per-capita spending.
In terms of overall healthcare expenditures and household OOP expenditures in India, the following factors are identified: per-capita income, secondary educational enrolment, urbanisation, inflation (CPI), life expectancy, and per-capita healthcare expenditure. The analysis finds that while per capita OOP health care expenditure is inversely related to inflation (CPI), growth in income, and urbanisation, there is a positive correlation between increases in life expectancy and education and decreases in population and total per-capita healthcare expenditures.
According to the study, these findings demonstrate the dual character of India’s health financing system and indicate the necessity of policy changes that increase public funding to ease household financial strain.
The research points to a structural challenge within India’s healthcare financing model, limited public investment coupled with a heavy dependence on private, out-of-pocket payments. This imbalance, the study argues, leaves rural households and economically weaker sections especially exposed to high medical costs, treatment delays and financial distress.
“Without stronger public financing, the burden of illness continues to fall most heavily on those least able to afford it,” the paper states.
Industry leaders said the evidence strengthens the case for policy reform. Amit Mookim, Board Director and CEO of Immuneel Therapeutics, said, “As India advances its ambition to become a global hub for next-generation biotherapies, the Union Budget 2026-27 can play a defining role in improving access, affordability, and innovation in cell and gene therapy.”
He highlighted the need for GST rationalisation on manufacturing inputs, import-duty relief, insurance coverage for one-time curative therapies such as CAR-T, and regulatory clarity aligned with global standards.
Mayank Singhal, Vice Chairperson and Managing Director of PI Industries, said the budget could help accelerate India’s transition into a global innovation hub through stronger R&D support, AI-driven research platforms and incentives for integrated drug discovery. He also underlined the importance of predictable fiscal and regulatory policies to boost competitiveness in innovative drug development.
