The burden of spending on healthcare largely rests on States and Union Territories, with health being a State subject according to the Constitution. Data analysed by businessline show that States are growing their healthcare spend at a good pace in recent years, outdoing the Centre.

Data from RBI’s study of State Budgets and the Union Budget reveals that total healthcare allocation by all States and Union Territories increased from ₹2.3 lakh crore in 2019-20 to ₹5 lakh crore in 2024-25, recording a CAGR of 16.8 per cent. In comparison, the Central government’s healthcare allocation grew from ₹62,397 crore in 2019-20 to ₹87,656 crore in 2024-25, recording a CAGR of just 7 per cent.

The faster growth in healthcare spends by States has resulted in their share in total healthcare expenditure (combined expenditure of Centre and States) moving higher. In 2019-20, States accounted for 79 per cent of total healthcare expenditure, which rose to 85.2 per cent in 2024-25.

State allocation

A State’s healthcare allocation is primarily guided by its health policies and annual plans, which vary across States. It is well known that States in the South and Central India have already established fairly good healthcare infrastructure. Numbers show that States such as Odisha, Rajasthan, Uttar Pradesh are now realising the need for spending on health and hence increasing the allocations to this segment.

In 2023-24, Bihar, Odisha and Chhattisgarh led in healthcare expenditure as a percentage of GSDP among all States and Union Territories, at 3.4 per cent, 3 per cent and 3 per cent, respectively. Meanwhile, Tamil Nadu, Karnataka and Punjab ranked at the bottom, with healthcare expenditure accounting for only 0.9 per cent of their total GSDPs.

In 2024-25, States like Odisha, Karnataka and Rajasthan experienced significant growth in healthcare expenditure, with increases of 26 per cent, 19.3 per cent and 17.3 per cent, respectively.

It is, however, concerning that States such as Bihar, Maharashtra and Uttarakhand reduced their healthcare budgets for FY25 by 37.4 per cent, 26.2 per cent and 15.3 per cent, respectively. The need to spend on freebies and populist schemes seems to have taken a toll on the essential spending on healthcare in these States.

Health security

As per the Global Health Journal in June, despite the rise in health expenditure, health security in India remains inadequate due to low public health spending, rising healthcare costs and high out-of-pocket expenditure.

“Administrative structure and political dynamics have an impact on health spending, particularly in democratic republics such as India,” the journal stated. “The Indian case is particularly relevant because of its federal structure. Health is recognised as a State subject in India. In other words, health is essentially the responsibility of State governments. As a result, public health spending differs among States depending on the priorities and political will of the provincial governments. With just 24.66 per cent, the percentage of healthcare expenditures by the government is significantly smaller than in the majority of other countries with comparable per capita GDP,” it added.