Healthy Soch
Ahead of Budget 2026
India
healthysoch
New Delhi, January 24, 2026:
As the government prepares the Union Budget 2026–27, a new Indian research study has added fresh empirical weight to long-standing demands for higher public healthcare spending, warning that socio-economic factors are increasingly driving medical costs and deepening inequality in access to care.
The study, “Impact of Determinants of Healthcare Expenditure in India: The ARDL Bounds Testing Approach,” published in the International Journal of Advanced Research (December 2025) and circulated in 2026, analyses national data from 1991 to 2023 to assess what shapes healthcare expenditure in India — both total per-capita spending and household out-of-pocket (OOP) payments
Using advanced econometric modelling, the authors find that income growth, urbanisation, education levels, inflation and life expectancy all have statistically significant long-term effects on healthcare spending.
Socio-economic change is pushing health costs higher
The research shows that rising incomes and rapid urbanisation are closely linked to higher healthcare consumption, while education and longevity also influence spending patterns, particularly private OOP expenses.
The findings suggest that India’s development trajectory itself is structurally pushing healthcare costs upward — disproportionately impacting families dependent on private care.
The dual system leaves households exposed
The study highlights the persistent “dual nature” of India’s health financing system: limited public spending alongside heavy reliance on private out-of-pocket payments.
This structure, the authors note, entrenches inequality, with rural and lower-income households facing a greater risk of catastrophic medical expenditure and delayed treatment.
“Without stronger public financing, the burden of illness continues to fall most heavily on those least able to afford it the paper concludes.
Industry backs reform push ahead of Budget
Industry leaders say the study reinforces the urgency of structural healthcare and innovation-focused reforms in the upcoming Budget.
Amit Mookim, Board Director & CEO, Immuneel Therapeutics, said “As India advances its ambition to become a global hub for next-generation biotherapies, the Union Budget 2026–27 can play a defining role in improving access, affordability, and innovation in cell and gene therapy…
Broader rationalisation of GST on manufacturing inputs, targeted import-duty relief, insurance frameworks for one-time curative therapies like CAR-T, innovative financing models, and a predictable regulatory pathway aligned with international standards will be critical to expanding patient access and ensuring sustainable innovation.”
Echoing the call for policy support across the life-sciences value chain, Mayank Singhal, Vice Chairperson & Managing Director, PI Industries, said: “As India progresses towards becoming a global hub for life sciences and innovation, the forthcoming Union Budget represents a pivotal opportunity to accelerate this transformation.
Innovation-led growth through enhanced R&D investments, AI-enabled research platforms, and sustained support for integrated drug discovery should be a key priority. Continued backing for domestic manufacturing of APIs and intermediates, including through the PLI framework, will be critical for strengthening supply-chain resilience.
Fiscal measures such as higher weighted deductions for R&D, a patent box regime, and streamlined regulatory approvals can significantly improve India’s global competitiveness in innovative drug development. A stable, predictable, and innovation-friendly policy environment will be instrumental in positioning India as a preferred destination for end-to-end drug discovery and development.”
Budget 2026 is seen as key opportunity
The study’s authors argue that long-run statistical evidence supports higher public investment — particularly in primary care, preventive services, and risk-pooling mechanisms — to reduce household financial stress and improve system resilience
India’s public health spending remains low compared with peer economies, while OOP payments remain a leading cause of financial distress.
With non-communicable diseases rising and the population ageing, the research—now reinforced by industry voices—strengthens the case for making healthcare and life-sciences innovation a central priority in Budget 2026–27.
