Relevance: GS II (Governance – Health) & GS III (Economy) | Source: The Hindu / Union Budget
1. The Context: Targets Missed
The National Health Policy (NHP), 2017 set a clear goal: India must increase its public health expenditure to 2.5% of GDP by 2025.
- The Reality: As of 2025-26, the combined spending (Centre + States) hovers around 1.9%, missing the target significantly.
- Global Standing: India spends less on public health than its smaller neighbors. For instance, Bhutan spends roughly 2.5 times more per person than India.
2. Who is Paying the Bill? (Centre vs. States)
Health is primarily a responsibility of the State Governments, but they rely on the Centre for funds.
- States Stepping Up: State governments have increased their health spending from 0.67% of GDP (2017) to 1.1% (2025).
- Centre Stepping Back: In contrast, the Union Government’s health spending has declined from 0.37% of GDP (during the pandemic) to 0.29% in 2025-26.
- The Squeeze: Central transfers for key schemes like the National Health Mission (NHM) have shrunk as a percentage of the total budget, forcing States to bear a heavier burden.
3. The “Cess” Controversy & Common Man’s Burden
- The Cess Issue: The government collects a 4% Health and Education Cess on income tax to fund these sectors. However, data shows that only about one-fourth of this collected money is actually transferred to the health budget; the rest is diverted elsewhere.
- High Costs: Because government spending is low, citizens pay from their own pockets. Out-of-Pocket Expenditure accounts for nearly 48% of total health spending. This high cost pushes roughly 63 million Indians into poverty every year.
UPSC Value Box
| Concept / Term | Relevance for Prelims |
| Out-of-Pocket Expenditure (OOPE) | Money paid directly by households for medical treatment at the point of service (e.g., doctor fees, medicines) which is not reimbursed by insurance or the government. High OOPE indicates a weak public health system. |
| National Health Policy, 2017 | The guiding document for India’s health strategy. Key targets: Increase life expectancy to 70 years by 2025 and increase health spending to 2.5% of GDP. |
| Seventh Schedule | Under the Constitution, “Public Health and Sanitation” is listed in List II (State List), making it the primary responsibility of State Governments. |
Q. With reference to the health sector in India, consider the following statements:
- “Public Health and Sanitation” is a subject under the Concurrent List of the Seventh Schedule of the Constitution.
- The National Health Policy (2017) aims to increase public health expenditure to 2.5% of GDP by 2025.
- The Health and Education Cess is levied at a rate of 4% on the taxable income of individuals and corporations.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 and 3 only
(c) 3 only
(d) 1, 2 and 3
Correct Answer: (b)
Share This Story, Choose Your Platform!
Start Yours at Ajmal IAS – with Mentorship StrategyDisciplineClarityResults that Drives Success
Your dream deserves this moment — begin it here.
