Indian states spending below NHP-recommended healthcare budget: Data

While Goa and Delhi are among the few states that exceed the national average, with Goa meeting the 8 per cent target, others like Uttar Pradesh and Bihar allocate less than 6 per cent to healthcare

State governments in India are allocating less than 8 per cent of their budgets to health and family welfare departments, as recommended by the National Health Policy (NHP) in 2017. The Budget Estimates for 2024-25 reveal that the average healthcare allocation across states stands at just 6.2 per cent. This gap between policy recommendations and actual financial commitment raises concerns among economists about the adequacy of funding for public health in India. 

Data from PRS Legislative Research, accessed by Business Today, highlights significant differences in healthcare spending across several Indian states. Goa and Delhi are among the few states that exceed the national average. While Goa meets the 8 per cent target recommended by the NHP, others like Uttar Pradesh, Bihar, and Madhya Pradesh allocate less than 6 per cent to public healthcare. These disparities in funding could have far-reaching consequences, particularly in underserved regions where the need for healthcare investment is greatest. 

 

The way in which states classify healthcare-related expenditures also contributes to the variation in reported healthcare spending. For example, Andhra Pradesh and Telangana classify spending on schools for marginalised communities under welfare, rather than education or healthcare. Similarly, in Punjab, electricity subsidies for farmers are categorised under ‘agriculture’ instead of energy. These differing classifications reflect how states prioritise and report their budget allocations, often resulting in a distorted picture of actual healthcare investment.

 

Role of central government schemes 

Central schemes such as Ayushman Bharat and the National Health Mission play a crucial role in supporting healthcare funding across the country. However, the level of funding varies significantly between states. In Delhi, for instance, the Union government manages police functions, and rural areas are minimal, which leads to a unique pattern of healthcare spending compared to other states. 

Without strengthening healthcare infrastructure, states may face escalating costs for treating illnesses, with limited gains in improving mortality rates, according to experts. They add that states must realise the link between health, productivity, and long-term economic growth to secure sustainable progress.

 

India’s healthcare spending: A long way to go 

As of 2023, India’s healthcare spending was just 1.8 per cent of its GDP, significantly below the global average of 6 per cent. Experts have called for this allocation to be increased to at least 2.5 per cent of GDP, with a focus on improving healthcare infrastructure, addressing non-communicable diseases (NCDs), and strengthening primary healthcare systems. 

Healthcare funding in India is supported by the central government through Centrally Sponsored Schemes (CSS), which target sectors covered by both the state and concurrent lists. The 15th Finance Commission recommended a total of Rs 4.4 trillion in grants for local bodies between 2021-22 and 2025-26, with 16 per cent allocated to the healthcare sector. These grants aim to support the development of diagnostic infrastructure and the expansion of health and wellness centres. 

Between 2021-22 and 2023-24, Rs 2.5 trillion was earmarked for local bodies, but only about 80 per cent of the recommended amount has been released so far. While rural local bodies have received more than 90 per cent of their allocated grants, urban local bodies and the primary healthcare sector have faced significant delays in receiving their share of funding. 

The underfunding of healthcare across India's states continues to be a pressing issue. While some states have made strides in allocating more resources to healthcare, others lag behind, leaving large segments of the population without adequate access to essential services.