Budget 2026: PMJAY expansion, healthcare infra push beyond tier-1 cities in focus

• Healthcare sector calls for structural reforms in Budget 2026, beyond incremental hikes.
• Calls for rural infrastructure, PPP incentives, and expanded insurance coverage
• India met Kala Azar target; TB elimination goal remains challenging

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In the run-up to the budget for the financial year 2026-27, the healthcare sector has called for a decisive shift  from incremental increases to structural transformation, saying India must bridge the gap between its current trajectory and the National Health Policy target of 2.5 percent of the GDP.

In FY25, the initial healthcare allocation stood at Rs 87,657 crore, which rose to around Rs 95,958 crore in FY26, up a 9.46 percent. Despite the increase, public expenditure remains below 2 percent of the GDP.

With the sector eyeing a $500 billion valuation by 2047, leaders say the Budget 2026 must provide a "booster dose".

Beyond Metros: Infrastructure and PPPs

A primary focus for the budget is expected to be the “decentralisation” of healthcare.

Healthcare infrastructure remains heavily skewed toward Tier-1 cities. Stakeholders are pushing for incentives to build in Tier 2 and 3 cities and rural areas.

Prakash Hospital CMD Dr VS Chauhan said the budget must focus on "enabling hospital-led growth through affordable capital access, faster clearances, and realistic reimbursement structures". Delays in government scheme payments currently restrict the capacity creation needed in smaller towns, he said.

There is a strong anticipation of fresh incentives for public-private partnership (PPP) models, which could leverage private expertise to manage secondary care facilities in underserved regions.

Industry body NATHEALTH has proposed a Healthcare Infrastructure Fund to support long-term financing for regional hospitals.

Expanding PMJAY and Reducing Out-of-Pocket Burden

India has made significant strides in reducing the out-of-pocket (OOP) burden on patients, which fell from 62.6 percent in 2014-15 to 39.4 percent in 2021-22. This was largely driven by the expansion of more than 1.76 lakh Ayushman Arogya Mandirs and the PMJAY insurance scheme, government data shows.

To bring down OOP costs, the civil society and industry is seeking expansion of Pradhan Mantri Jan Arogya Yojana (PMJAY). The healthcare scheme recently expanded to include all citizens aged 70 and above, regardless of socio-economic status.

The government must also cut GST on healthcare insurance premiums and medicines.

For Budget 2026, stakeholders are calling for expanding the beneficiary base and increasing the insurance cover per family.

Hospital leaders have highlighted that "delays in payments under government schemes restrict reinvestment and slow capacity creation". Dr Chauhan stressed on the need for "realistic reimbursement structures" to make the scheme sustainable for private providers.

The industry is also pushing for correcting the "inverted duty structures" on medical devices and a uniform 5 percent GST to lower hospital input costs.

The tax deduction for preventive health check-ups —capped at Rs 5,000 — should be raised to encourage early risk detection. Shobana Kamineni, Promoter Director of Apollo Hospitals, has called for a "prevention-first healthcare system" to unlock early diagnosis.

Disease targets: TB and Kala Azar

The budget will also serve as a status report on India’s major health missions.

India has successfully achieved the Kala Azar elimination target of less than one case per 10,000 population across all endemic blocks.

The challenge is steeper for tuberculosis (TB). While TB incidence fell 17.7 percent between 2015 and 2023 (to 195 per lakh), India remains far from its 2025 elimination goal of 44 cases per lakh.

Analysts expect the budget to increase funding for the Ni-kshay Poshan Yojana to bridge this gap. While not explicitly detailed with a status percentage of Sickle Cell Anaemia in the recent industry notes, the government remains committed to its mission for elimination by 2047.