India’s healthcare sector is at a critical juncture, with the Union Budget 2025-26 offering a transformative opportunity to address existing challenges and unlock its full potential. As India moves toward becoming a $5 trillion economy, ensuring quality healthcare for its vast population is a necessity, not a luxury. While the private sector has been at the forefront of healthcare expansion, with more than 110% of its profits reinvested into infrastructure over the past five years, government support is essential to bridge existing gaps and create an equitable healthcare system.
Strengthening Healthcare Investment
Strategic reforms and substantial investments are required to enhance access to quality healthcare, combat the dual burden of communicable and lifestyle diseases, and build a robust healthcare infrastructure. A key priority for the Union Budget should be increasing healthcare expenditure to over 2.5% of GDP, enabling large-scale investments in both physical and digital healthcare infrastructure.
A nationwide effort to add 2.5–3.0 million hospital beds through Viability Gap Funding (VGF) and long-term, low-interest capital investments is crucial. These investments must focus on mid-sized and smaller healthcare providers to ensure an equitable distribution of healthcare facilities across urban and rural India.
In urban centers, allowing hospitals to expand vertically can help ease infrastructure challenges. At the same time, government-backed funding for fire safety upgrades will ensure compliance with necessary safety regulations, making high-rise healthcare facilities safer and more efficient.
Making Cancer Care More Affordable
Cancer remains one of the leading causes of death in India, with treatment costs often pushing families into financial distress. The government must introduce policy measures to make cancer care more accessible and affordable:
- Reducing import tariffs and lowering GST on oncology equipment (such as Linear Accelerators (LINACs)) to 5% can significantly reduce costs.
- Expanding treatment facilities in underserved regions will ensure timely and advanced care for all.
- Reducing import duties on medical devices (currently up to 36%) will help mid-sized providers offer more affordable treatment.
Lowering import duties will increase competition and drive down costs, extending essential cancer care to more Indians.
Taxation Reforms for a More Affordable Healthcare System
India’s fragmented tax structure is a significant factor in the high cost of healthcare services. Introducing a unified 5% GST slab on all healthcare goods and services could help lower input costs for providers, making healthcare more affordable for consumers.
Additionally, revenue generated from healthcare-specific CESS and a higher GST rate on select luxury products could be directed toward public health programs, improving healthcare accessibility for lower-income groups.
Revamping Public Health Insurance Reimbursement Rates
Insurance reimbursement rates under public schemes like PMJAY, CGHS, and ECHS have remained stagnant for almost a decade, making it difficult for healthcare providers to stay financially viable. Indexing reimbursement rates to the Consumer Price Index (CPI) can help:
- Ensure sustainable operations for healthcare providers.
- Continue to provide high-quality medical care under government insurance schemes.
- Reduce out-of-pocket expenses for patients.
Driving Innovation in Med-Tech and Digital Health
The medical technology (med-tech) sector plays a crucial role in improving health outcomes. The Union Budget should allocate dedicated funds for research and development (R&D) in med-tech innovation. Shifting towards quality-linked procurement norms will encourage innovation, leading to better and more cost-effective treatments.
A comprehensive 10-year digital health incentive plan is also necessary to promote the Ayushman Bharat Digital Mission (ABDM). This plan should focus on:
- Electronic Health Records (EHRs) to ensure seamless patient data management.
- Enhanced data security measures to protect sensitive health information.
- Technical upskilling for healthcare professionals to ensure the effective adoption of digital health solutions.
Collaboration between industry, academia, and startups can accelerate innovation, making India a global leader in digital health solutions.
Strengthening India’s Medical Tourism Industry
India has the potential to become a global hub for medical tourism, offering world-class healthcare services at competitive prices. A dedicated fund to promote India as a medical tourism destination could boost the economy and healthcare infrastructure.
- Investments in critical healthcare infrastructure will attract international patients.
- Establishing a centralized medical tourism framework will improve patient experience.
- Strengthening India’s reputation for specialized treatments (such as cardiology, oncology, and organ transplants) will further its position as a leader in global healthcare.
Addressing Workforce Shortages in Healthcare
India faces a shortage of doctors, nurses, and paramedics, especially in rural areas. The government must:
- Increase medical college seats and streamline regulations to encourage private investment in medical education.
- Offer financial incentives and scholarships for healthcare workers willing to serve in rural areas.
- Strengthen nursing and paramedical training programs to create a robust healthcare workforce.
A well-trained healthcare workforce is critical for strengthening India’s health system and ensuring universal access to quality care.
Building a Resilient Healthcare System for the Future
The Union Budget 2025-26 presents a historic opportunity to implement strategic reforms that will reshape India’s healthcare landscape. Increased investments, policy changes, and technological advancements can:
- Make quality healthcare accessible to all citizens.
- Reduce treatment costs through tax and import duty reforms.
- Foster innovation in medical technology and digital health.
- Enhance public health infrastructure to meet the challenges of both communicable and lifestyle diseases.
With bold decisions and a clear vision, India can become a global leader in healthcare, ensuring its citizens receive the quality care they deserve while setting an example for the world.
The time to act is now—India’s healthcare transformation cannot wait!
