Health Sector Budget Allocation as Percentage of GDP Declining: Parliamentary Panel

New Delhi: The Parliamentary Standing Committee on Health and Family Welfare has expressed concerns over the declining share of funds allocated to the health sector in the Union Budget 2025-26 and called for increased investment to strengthen India’s public healthcare infrastructure. It termed the budget as “abysmally low”.

In its report presented to Parliament on March 12, 2025, the committee noted that the Department of Health and Family Welfare has been allocated Rs 95,957.87 crore for 2025-26, representing 1.89% of the total Union Budget and 0.27% of the GDP. While this marks a 10.83% increase from the Revised Estimate (RE) of 2024-25, the Committee highlighted that health spending as a percentage of GDP has remained stagnant at 0.27% since 2022-23, far below the National Health Policy’s target of 2.5% by 2025.

Explaining that the government needs to spend more on health, the committee urged the healthcare department to take concrete steps to enhance the utilization of allocated funds effectively so that the targets set under a specific scheme are achieved.

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The report further pointed out a recurring trend where the actual expenditure consistently falls short of the budgeted allocation. As of January 31, 2025, only 81.32% of the total RE had been utilized, leaving Rs 16,000 crore unspent with just two months remaining in the fiscal year. The Committee emphasized the need for the Department to ensure optimal utilization of funds to meet healthcare targets.

"There is a need to accelerate the rate of improving healthcare to global standard and proportional to the rate of population growth. India being the most populous country, and given the inflationary pressures and the National Health Policy's target of increasing government health expenditure to 2.5% of GDP by 2025, the Committee believes that the allocation to the health sector, particularly to the Department of Health and Family Welfare, should have been much higher. The Committee, therefore, urges the Department to take concrete steps to enhance the utilization of allocated funds effectively so that the targets set under a specific scheme are achieved," said the committee.

Delays in AIIMS Projects

The report also flagged significant delays in the construction of new AIIMS institutions due to bottlenecks in land acquisition and statutory clearances. The Committee cited ongoing issues in Darbhanga, Madurai, and Rewari, where delays have led to cost escalations and hindered healthcare service expansion.

To address these concerns, the panel recommended that the Ministry of Health and Family Welfare, in collaboration with state governments, establish a standardized and expedited process for land acquisition and clearances. It called for the formulation of clear guidelines and timelines for state governments regarding the provision of encumbrance-free land and create a fast-track mechanism for obtaining environmental and other necessary clearances; and establishing a dedicated coordination cell to address site-related hindrances.

Staff crunch

The Committee raised alarms over the high number of vacancies in the Department of Health and Family Welfare. Out of the sanctioned strength of 1,486 posts, 428 remain vacant in 2024, showing little improvement from the previous year’s 454 unfilled positions.

It also notes that there is a shortage of Officers/Staff at various levels in the Department of Health and Family Welfare, which may impact the effective administrative functioning of the Ministry.

Noting that these shortages could impact the department, the Committee urged the Ministry to take up the matter with Cadre Controlling Authorities and recruit agencies to expedite hiring at all levels.

"Public health plays a crucial role in driving the country’s economic development. Given the inadequacy and overstretched nature of public health infrastructure, investments in the health sector must be increased. With inflation expected to remain high in the near term, the Department should consider requesting higher budgetary allocations for the health sector at the Revised Estimate stage and ensure the optimal utilization of allocated funds," said the panel.

The Committee is of the view that strengthening of public health infrastructure, enhancing preventive and primary care services, leveraging PublicPrivate Partnerships (PPP), exploring additional revenue sources, innovation in health, robust monitoring and evaluation mechanism to track the utilization of health funds and assess the impact are crucial for establishing an affordable and accessible healthcare delivery system, especially for a developing economy like India. The need of the hour is to recognize health as a key sector for economic as well as social development. The Committee, therefore, strongly recommends that the Government make health a priority and increase its investment in the health sector.

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