Sugandh Khandelwal
The Union Budget 2025-26 presents several positives for the healthcare sector at first glance, but a deeper analysis reveals potential challenges that have gone unattended. Here’s TISHHA’s take on the good and not-so-good parts of the budget.
Significant boost in Ayushman funding
The allocation for healthcare has seen an increase of approximately 10.8%, rising from Rs 86,582.48 crore in FY2024-25 to Rs 95,957.87 crore in FY2025-26. Among the most significant boosts is the funding for Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (PM-JAY), which has seen a substantial 28.8% rise, from Rs 7,299 crore last year to Rs 9,406 crore in FY2026.
A major challenge – More medical seats without enough faculty
One of the major announcements was the addition of 1.1 lakh undergraduate (UG) and postgraduate (PG) medical education seats over the next 10 years, with 10,000 seats set to be added in the next year. This is part of an ambitious plan to add 75,000 new seats in the next five years. This increase is expected to help bridge India’s doctor-patient ratio, which stands at 1:834, closer to the World Health Organization’s recommended ratio of 1:1000. However, the increase in medical seats is not without concerns.
Without adequate infrastructure and qualified faculty, the addition of these 10,000 extra medical seats could prove to be insufficient and could also hamper the quality of medical education. There are also fears that the lack of incentives and infrastructure could lead to an exodus of medical graduates abroad in search of better job opportunities. The bigger challenge remains in encouraging doctors to practice in rural and underserved areas where there is a greater need for medical professionals.
More Daycare Cancer Centres need more superspecialists
Another key initiative was the establishment of daycare cancer centres in all district hospitals across the country within the next three years, with a goal of setting up 200 centres in the first year alone. This decentralization of cancer care is a positive step towards making cancer treatment more accessible at the grassroots level. However, many medical students may be reluctant to work in district towns, and private cancer care providers have raised concerns about the complexity of cancer treatment.
They argue that the quality of care may be compromised at these daycare centres, as specialized oncologists and onco-paramedical staff would be required at each location. Despite these challenges, the move could potentially lead to improvements in telemedicine services and attract diagnostic providers to expand into rural areas.
Diagnostics sector mostly happy, GST remains a concern
In the diagnostics sector, there were mostly positive reactions to the budget. However, industry players pointed out that rationalizing the Goods and Services Tax (GST) and increasing tax exemptions for preventive health check-ups could create a win-win situation. These measures would encourage regular testing, leading to early diagnosis and improved treatment outcomes, while boosting revenues for diagnostics companies.
Efforts made to reduce financial burden of treatment
The budget also included a proposal for a basic customs duty exemption on 36 life-saving drugs, a 5% reduction in customs duty on six other drugs, and the addition of 13 new patient assistance programmes. These measures aim to reduce the financial burden on patients, allowing more individuals to complete their treatment regimens rather than abandoning them due to cost. The customs duty exemptions for bulk drugs used to manufacture these medications are expected to encourage pharmaceutical companies to focus on these therapies, increasing access to essential treatments and boosting long-term revenues.
Focus on medical tourism
Additionally, the budget promotes the “Heal in India” initiative, which aims to boost medical tourism. This could encourage private healthcare providers to increase their capacity, creating more employment opportunities within the sector. However, one group that feels overlooked in this budget is indigenous medical device and technology manufacturers. The lack of support, such as increased customs duties on imported devices or rationalized GST rates, has left these manufacturers dissatisfied. The diagnostics and imaging equipment sectors would also have benefited from lower and simplified GST rates.
While the Union Budget 2025-26 presents promising measures for the healthcare sector, its success depends on the efficient and timely implementation of these proposals, ensuring that allocated funds are used optimally. After the initial enthusiasm around the budget announcement, the private sector is left wondering if there will be specific policy measures to encourage public-private partnerships, or if the ongoing stalemate between the government, policymakers, and private healthcare providers will persist.
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