Has health spending by the Centre increased?

UPSC Study Note | GS-II | Health Policy & Governance

1. At a Glance

• Central question: Whether the Union government's share of public health spending has kept pace with the National Health Policy (NHP) 2017 target of raising government health expenditure to 2.5% of GDP by 2025. [1][2]
• The NHP 2017 further stipulated the Centre's share should be 40% of total public health spending, implying the Centre needs to spend ~1% of GDP on health — up from ~0.29%. [4]
• States have increased their health allocations post-pandemic; the Union government has not — making this a critical federalism and fiscal equity issue. [4][S5]
• Relevant for GS-II (Health, Centre-State relations) and Budget/Economic Survey questions on social sector financing.

2. Why in the News

• January 30, 2026: The Hindu reported that 2025 — the deadline year for the NHP 2017 target — has passed without the Centre meeting its health expenditure commitment. [4]
• Economic Survey 2024-25 highlighted that the share of Government Health Expenditure in Total Health Expenditure rose from 29% (FY15) to 48% (FY22), but this improvement was driven primarily by States, not the Centre. [1]
• The Union Budget 2025-26 allocated ₹37,227 crore to the Ministry of Health & Family Welfare — only 3% higher than revised estimates of 2024-25, reflecting stagnation in real terms. [3]

3. Background & Evolution

Predecessor initiatives: Bhore Committee Report (1946) first recommended comprehensive public health system; National Health Policy 1983 & 2002 preceded NHP 2017.

4. Core Static Facts

• Implementing Ministry: Ministry of Health & Family Welfare (MoHFW)
• Key Policy Document: National Health Policy 2017 (NHP 2017)
• NHP 2017 Targets:
• Government health expenditure: 1.15% → 2.5% of GDP by 2025 [4]

• Centre's share of total public health spending: 40% (implying ~1% of GDP from Centre alone) [4]

• Current Status (FY24): Total government health expenditure ~1.9% of GDP [1]; Centre's contribution still ~0.29% of GDP [4]

• Govt share in total health expenditure: rose from 29% (FY15) → 48% (FY22) [1]
• Centre share in total govt health spending: rose from 28.6% (FY14) → 40.6% (FY19) [2]
• Union Health Budget 2025-26: ₹37,227 crore (+3% over revised FY25 estimates) [3]
• CAGR of MoHFW expenditure (2016-17 to 2024-25): 12% [3]
• Pandemic note: COVID-19 vaccination expenditure was routed through the Finance Ministry, not MoHFW — inflating apparent health spending during 2020-22 [3]
• 15th Finance Commission also recommended reaching 2.5% of GDP for combined Centre+States health spending [1]
• Enabling framework: NHM Act; NHP is a policy (non-statutory) document
• Key data source: Reserve Bank of India (RBI) compiles State-level health expenditure data [4]
• National Health Accounts (NHA): Tracks current health expenditure — published by MoHFW [2]

5. Multi-Dimensional Analysis

Economic

• India's out-of-pocket expenditure (OOPE) remains high (~50%+ of total health expenditure), directly linked to low public provisioning. [4]
• Centre's health budget growing at 12% CAGR but insufficient against GDP growth + inflation + population needs. [3]
• NHP 2017 missed its deadline: requires 3× increase in Centre's current allocation to reach 1% of GDP. [4]

Social

• Comparative deprivation: Per capita public health spending in India is ~2.5× less than Bhutan, ~3× less than Sri Lanka, and 14-15× less than all other BRICS nations (2021 data). [4]
• Thailand and Malaysia spend ≥10× more per capita on health than India. [4]
• Low public spending forces households into catastrophic health expenditure, deepening poverty — disproportionately affecting SC/ST, rural poor, women. [4]

Legal / Constitutional

• Health is a State subject (Entry 6, State List, Schedule VII) of the Constitution — explains the Centre's structurally limited direct spending role.
• Article 47 (DPSP): State shall raise nutrition levels, standard of living, and improve public health — a constitutional obligation applicable to both Centre and States.
• NHP 2017 is a policy document, not a statute — no legally binding enforcement mechanism for targets.

Administrative / Federalism

• States have increased health allocations post-pandemic and sustained them; Centre has not matched this trajectory. [4]
• Centre's role is primarily through Centrally Sponsored Schemes (NHM, PM-JAY/Ayushman Bharat) with Centre-State cost-sharing ratios.
• Vertical fiscal imbalance: States bear ~60% of public health spending but depend on Centre for fiscal transfers.
• COVID vaccination routed via Finance Ministry — creates accounting distortions in assessing MoHFW's actual health spend. [3]

Ethical / Governance

• Missing the NHP 2017 target by 2025 raises accountability questions — no statutory penalty for policy non-compliance.
• Underinvestment in public health creates two-tier healthcare: robust private sector for the affluent, inadequate public system for the poor.
• 15th Finance Commission's recommendation of 2.5% target echoed NHP — both remain unimplemented. [1]

6. Recent Developments (Last 12–18 Months)

• January 2026: The Hindu analysis confirms NHP 2017's 2025 deadline has passed with Centre's health spending still far below required levels; States have sustained post-COVID increases but Centre has not. [4]
• February 2025 (Union Budget 2025-26): MoHFW allocated ₹37,227 crore — only 3% nominal increase over revised FY25; in real terms (inflation-adjusted), virtually flat. [3]
• Economic Survey 2024-25: Govt share in total health expenditure improved from 29% (FY15) to 48% (FY22), but improvement attributed largely to State spending. [1]
• FY24: Total government health expenditure (Centre + States) reached 1.9% of GDP — still below the 2.5% NHP target. [1]
• 2025-26 PRS Analysis: MoHFW expenditure CAGR of 12% over 2016-25, but AIIMS and central institutions consume ~20% of the allocation, limiting frontline service spending. [3]

7. Prelims Hooks

1. NHP 2017 target: Increase government health expenditure from 1.15% to 2.5% of GDP by 2025. [4]
2. The National Health Policy 2017 stipulated the Centre's share should be 40% of total public health spending. [4]
3. This implies the Centre's spending must rise from ~0.29% to ~1% of GDP — a 3× increase required. [4]
4. Government share in total health expenditure rose from 29% (FY15) to 48% (FY22) — per Economic Survey 2024-25. [1]
5. Centre's share in total government health spending rose from 28.6% (FY14) to 40.6% (FY19). [2]
6. Total Health Expenditure in FY22: ₹9,04,461 crore = 3.8% of GDP (₹6,602 per capita). [1]
7. Government health expenditure in FY24: approximately 1.9% of GDP. [1]
8. MoHFW Budget 2025-26: ₹37,227 crore (3% higher than revised FY25 estimates). [3]
9. CAGR of MoHFW expenditure from 2016-17 to 2024-25: 12%. [3]
10. India's per capita health spending is ~2.5× less than Bhutan and ~3× less than Sri Lanka (2021). [4]
11. All other BRICS nations spent 14-15× more per capita on health than India (2021). [4]
12. COVID-19 vaccination spending was routed through the Finance Ministry, not MoHFW — inflating apparent pandemic health expenditure. [3]
13. Health is in the State List (Entry 6, Schedule VII) of the Constitution — Centre's direct spending is structurally limited.
14. Article 47 (DPSP) places public health improvement as a constitutional obligation on the State.
15. The 15th Finance Commission also recommended reaching 2.5% of GDP for combined Centre-State health spending. [1]

8. Mains Relevance

Plausible Mains Question Stems:

1. "Critically examine India's progress towards the National Health Policy 2017 targets, with special reference to the Union government's contribution to public health expenditure."
2. "Despite Constitutional mandate under Article 47 and NHP 2017 commitments, India's public health spending remains abysmally low. Analyse the structural reasons and suggest remedies."
3. "The divergence between Centre and States in post-pandemic health spending reveals a fundamental asymmetry in India's cooperative federalism. Discuss."

9. Related Topics to Study Next

10. Common Errors / Trap Areas

1. Confusing total government health expenditure with Centre-only spending: The 1.9% of GDP (FY24) figure is the combined Centre + States figure — the Centre alone contributes only ~0.29% of GDP. Examiners exploit this distinction. [1][4]
2. Assuming NHP 2017 target was met: The 2025 deadline has passed and the target is not met — do not conflate the "48% govt share in total health expenditure" improvement (largely State-driven) with meeting the 2.5% GDP target. [1][4]
3. Misattributing COVID health spending: Pandemic vaccination expenditure was under the Finance Ministry, not MoHFW — do not treat the pandemic spike as a genuine upscaling of MoHFW's health mandate. [3]
4. Health as a Union subject: Health is in the State List (Entry 6), not the Union List. Central schemes (NHM, PM-JAY) operate as Centrally Sponsored Schemes (CSS) — not direct Centre spending on a Union subject.
5. NHP 2017 vs. NHP 2002: There are two prior National Health Policies (1983 and 2002). NHP 2017 is the operative policy; confusing their targets or years is a common MCQ trap.