Reshaping the Future of Healthcare in India

Introduction

India’s health sector is at a turning point. An ageing population, the rapid rise of lifestyle diseases, and the lingering impact of the pandemic are putting growing pressure on public health systems. While recent policies highlight innovation, biopharma, and skill development in healthcare, basic public healthcare funding and primary care continue to receive inadequate attention. High out-of-pocket expenses and wide regional inequalities show that access, affordability, and preventive care remain uneven. What India now needs is a real shift—from policy announcements to sustained public spending that genuinely strengthens public health on the ground.

What is the Current Regulatory Framework for India’s Health Sector?  

• Constitutional Basis:
  • The Constitution of India provides the framework for regulating health by clearly dividing powers between the Centre and the States through the Seventh Schedule.
• State List (List II):
  • Public health and sanitation, hospitals, and dispensaries are mainly the responsibility of the States (Entry 6). This means state governments are in charge of delivering healthcare services on the ground.

• Concurrent List (List III):
  • Both the Centre and the States have the authority to make laws on certain health-related matters, including:

• Medical education and the medical profession (Entry 26).
• Prevention and control of the spread of infectious diseases (Entry 29).
• Regulation of drugs and poisons (Entry 19).

This arrangement allows states to manage day-to-day healthcare delivery while enabling national coordination on issues that require uniform standards and collective action.

• Fundamental Rights & DPSPs:
  • Article 21: Interpreted by the Supreme Court to include the Right to Health as part of the Right to Life. 
  • Article 47: Directs the State to regard the raising of the level of nutrition and the standard of living of its people and the improvement of public health as among its primary duties. 
• Key Regulatory Bodies: 
  • The institutional framework is spearheaded by the Ministry of Health and Family Welfare (MoHFW), supported by various autonomous and statutory bodies: 

Body	Key Mandate
National Medical Commission (NMC)	Replaced the Medical Council of India; regulates medical education, medical practice, and professional ethics under the NMC Act, 2019.
Central Drugs Standard Control Organization (CDSCO)	National regulatory authority for pharmaceuticals and medical devices; approves new drugs, vaccines, and clinical trials under the Drugs and Cosmetics Act, 1940.
Food Safety and Standards Authority of India (FSSAI)	Ensures food safety by regulating the manufacture, storage, distribution, sale, and import of food products.
National Health Authority (NHA)	Apex body responsible for implementing Ayushman Bharat–PM Jan Arogya Yojana (PM-JAY) and the Ayushman Bharat Digital Mission (ABDM).
National Pharmaceutical Pricing Authority (NPPA)	Fixes and revises prices of essential drugs and formulations; monitors prices and ensures availability of medicines.
Indian Nursing Council (INC)	Regulates nursing education, training standards, and professional norms across the country.

• Major Legislative Framework:
  • India’s health sector is governed by several important laws that set rules, standards, and compliance requirements across healthcare delivery, education, and pharmaceuticals.
• Drugs and Cosmetics Act, 1940 (and Rules, 1945):
  • This is the backbone of pharmaceutical regulation in India. It provides a detailed legal framework for the import, manufacture, distribution, and sale of drugs and cosmetics.
    Schedule M of the Rules prescribes Good Manufacturing Practices (GMP), broadly aligned with World Health Organization (WHO) standards to ensure quality and safety.
• National Medical Commission Act, 2019:
  • This law restructured medical education in India. It introduced the National Exit Test (NExT) and brought greater regulation over admissions and fee structures in private medical colleges.
• Clinical Establishments (Registration and Regulation) Act, 2010:
  • It seeks to register all hospitals, clinics, and diagnostic centres and prescribe minimum standards for infrastructure and services.
    However, its implementation remains uneven because states must separately adopt the Act.
• Mental Healthcare Act, 2017:
  • This Act marked a rights-based shift by decriminalising suicide attempts and guaranteeing every person the right to access mental healthcare services.
• Epidemic Diseases Act, 1897 (Amended in 2020):
  • It empowers governments to take extraordinary measures to prevent and control the spread of dangerous epidemic diseases and was extensively used during the COVID-19 pandemic.
• New Drugs and Clinical Trials (NDCT) Rules, 2019:
  • These rules modernised and streamlined the approval process for new drugs and clinical research in India.
    The Union Health Ministry later eased pharmaceutical research by replacing the CDSCO test licence requirement with a prior-intimation system for non-commercial research quantities, while high-risk drugs such as cytotoxic, narcotic, and psychotropic substances continue to require licences.
• National Commission for Allied and Healthcare Professions Act, 2021:
  • This law standardises the education, training, and professional practice of allied and healthcare professionals across the country.

What are the Key Advancements in India’s Health Sector? 

Launch of “Bio Pharma Shakti” & R&D Shift

• The government has shifted focus from low-cost generic medicines to high-value innovation by launching the Bio Pharma Shakti initiative.
• The aim is to tap the global biologics market and reduce dependence on imported complex therapies.
• This marks a move from “volume-based” pharma leadership to “value-based” leadership.
• Budget 2026–27 has allocated ₹10,000 crore to boost domestic production of biologics and biosimilars.
• The initiative includes setting up 3 new NIPERs, upgrading 7 existing NIPERs, and strengthening accredited clinical trial sites to move India up the pharmaceutical value chain.

Ayushman Bharat Expansion for the “Silver Economy”

• The government has expanded health coverage for senior citizens, removing income-based eligibility.
• This addresses the high disease burden and healthcare costs faced by the ageing population.
• Universal coverage helps prevent catastrophic health spending that often pushes pensioner households into poverty.
• Budget 2026–27 confirmed coverage for about 6 crore senior citizens from 4.5 crore families under Ayushman Bharat PM-JAY.
• The Ministry of Health and Family Welfare’s overall budget has been increased by nearly 10% compared to FY 2025–26.

MedTech Self-Reliance & PLI Maturity

• The medical device sector is experiencing a manufacturing push as PLI schemes begin delivering results.
• Domestic production of critical equipment is reducing reliance on imports.
• This lowers healthcare delivery costs and protects supply chains from global disruptions.
• By early 2026, 22 greenfield projects had started production of over 55 high-end devices such as CT and MRI scanners.
• Budget 2026 also reduced customs duties on components to encourage domestic value addition.

Targeted Cost Reduction in Oncology & Rare Diseases

• Recognising the high cost of cancer treatment, the government has used fiscal measures to reduce prices.
• Customs duty rationalisation has lowered the cost of life-saving immunotherapies.
• This helps middle-class patients who are not covered by state insurance but cannot afford private care.
• Budget 2026–27 exempted 17 cancer and rare-disease drugs from customs duty.
• This is supported by plans to establish new trauma centres in every district hospital.

Shift Towards Outpatient & Preventive Care

• The Economic Survey 2025–26 highlights a shift from hospital admissions to outpatient care and preventive screening.
• Ayushman Arogya Mandirs are driving early detection of non-communicable diseases.
• This reduces long-term pressure on tertiary hospitals by treating illness early.
• By December 2025, there were over 506 crore visits to AAMs and 42.66 crore teleconsultations nationwide.

Digitisation of Immunisation through the U-WIN Portal

• The U-WIN portal has digitised the Universal Immunisation Programme across the country.
• It allows real-time tracking of mothers and children and issues QR-based digital vaccination certificates.
• Automated SMS reminders help reduce dropouts from immunisation schedules.
• Integration with ABHA creates a lifelong digital health record for children.
• By early 2026, U-WIN had tracked 27.7 crore vaccine doses covering 7.43 crore beneficiaries.

Acceleration of Sickle Cell Anaemia Elimination Mission

• The mission to eliminate Sickle Cell Disease by 2047 has moved into active implementation.
• Large-scale screening and genetic counselling are being conducted in tribal areas.
• Community-based interventions help address long-standing health neglect in tribal regions.
• By July 2025, over 6.07 crore screenings had been completed across 17 tribal-dominated states.

Critical Care Infrastructure Strengthening (PM-ABHIM)

• Budget 2026 significantly increased funding for the Ayushman Bharat Health Infrastructure Mission.
• The goal is to build a decentralised network of critical care blocks and public health laboratories.
• This will help manage future health emergencies at the district level instead of overburdening big cities.
• An allocation of ₹4,770 crore was made in Budget 2026, marking a 67.6% increase.

What are the Key Issues Associated with India’s Health Sector?  

Chronic Underfunding & Stagnant Public Health Spending

• Even after recent budget increases, government spending on health remains very low compared to other countries.
• This forces people to depend heavily on private healthcare, which widens inequality.
• Limited public funding slows the expansion of hospitals, staff, and services.
• As a result, the “Right to Health” often remains a promise on paper rather than a lived reality.
• Union government health spending fell from 0.37% of GDP in 2020–21 to 0.29% in 2025–26 (Budget Estimate).

The “Missing Middle” & High Out-of-Pocket Expenses

• Government schemes protect the poorest, and private insurance serves the wealthy.
• Middle-class families often fall through the cracks and face severe financial stress from even one hospital stay.
• Outpatient care, diagnostics, and medicines are costly and usually not covered by insurance.
• This pushes millions of households into poverty every year.
• Out-of-pocket expenditure still accounts for 39.4% of total health spending (NHA 2021–22).

Rural-Urban Divide & the “Ghost Specialist” Problem

• Rural healthcare infrastructure has expanded in buildings but not in functioning staff.
• Many rural hospitals exist without specialists, making them largely non-functional.
• Patients bypass local centres and rush to urban hospitals, overcrowding tertiary care.
• Meanwhile, rural Community Health Centres remain underused.
• Nearly 80% of specialist posts in rural CHCs are vacant, with over 17,500 positions unfilled (Rural Health Statistics 2022–23).

The “Silent Epidemic” of Non-Communicable Diseases

• India is seeing a rapid rise in lifestyle diseases such as diabetes and hypertension.
• The health system is still geared toward short-term treatment rather than lifelong disease management.
• This creates a “dual burden” of infectious and non-communicable diseases.
• Long-term care for chronic illnesses is costly and difficult for the public system to sustain.
• India has about 101 million people with diabetes and 136 million with pre-diabetes (ICMR-INDIAB study).

Regulatory Weaknesses & Drug Quality Concerns

• India’s reputation as the “pharmacy of the world” is under strain due to weak enforcement of manufacturing standards.
• Quality control varies widely across states, leading to safety lapses.
• Repeated incidents of contaminated medicines have exposed gaps in regulation and accountability.
• Deaths linked to toxic cough syrups in countries like Gambia and Uzbekistan, and in Indian states, triggered WHO alerts.
• These incidents forced stricter inspections and crackdowns by drug regulators.

Antimicrobial Resistance – A Growing Health Threat

• Unregulated sale of antibiotics and poor infection control have led to dangerous drug resistance.
• Common bacteria are becoming resistant to multiple antibiotics, reducing treatment options.
• This makes even minor infections or routine surgeries risky.
• Antimicrobial resistance threatens to undo decades of medical progress.
• ICMR studies show high resistance levels in bacteria such as E. coli, Klebsiella pneumoniae, and Acinetobacter baumannii.

Uneven Health Workforce Distribution

• National doctor-population averages hide deep regional imbalances.
• Doctors and specialists are concentrated in urban and richer states.
• Rural and poorer regions face acute shortages of medical staff.
• There is also a lack of nurses, technicians, and allied health professionals.
• While India claims a 1:834 doctor-population ratio, states like Bihar and Uttar Pradesh lag far behind Kerala.

Digital Health Gaps & Data Security Risks

• Digital health initiatives face challenges due to poor internet access and low digital literacy.
• Rural and vulnerable populations struggle to use digital health platforms effectively.
• Although nearly 79 crore ABHA IDs have been created, active usage remains limited in many areas.
• Data privacy and cybersecurity concerns are growing.
• The 2022 ransomware attack on AIIMS exposed serious weaknesses in health data protection.

What Measures are Needed to Strengthen India’s Health Sector? 

Operationalising “Phygital” Comprehensive Primary Care

• Ayushman Arogya Mandirs should be upgraded from basic physical centres into “phygital” hubs that combine in-person care with digital services.
• Using telemedicine platforms, patients should be able to consult specialists remotely while continuing to receive personal, community-based care.
• A strict referral system should be enforced so that tertiary hospitals are accessed only through primary care referrals.
• This will reduce overcrowding in big hospitals and shift focus from treatment to prevention.
• The hybrid model will also help manage chronic diseases like diabetes and hypertension through early diagnosis and continuous follow-up at the local level.

Using Public Health Insurance to Improve Quality and Control Costs

• The government should act as a “smart buyer” of healthcare services rather than just reimbursing bills.
• The large scale of Ayushman Bharat PM-JAY can be used to demand better quality and fair pricing from private hospitals.
• Payment systems should shift from paying for each procedure to rewarding good health outcomes.
• This encourages hospitals to focus on patient recovery rather than unnecessary treatments.
• Such an approach can improve price transparency and standardisation without strict price controls.

Creating a Dedicated Public Health Management Cadre

• India needs a separate, non-clinical public health management cadre to handle administration and planning.
• This cadre would focus on logistics, disease surveillance, hospital management, and data analysis.
• Doctors would then be free to concentrate fully on patient care.
• Professional management at the district level would improve efficiency and emergency response.
• This reform is essential for better use of resources during health crises.

Institutionalising a “One Health” Governance System

• Health governance should integrate human, animal, and environmental health instead of treating them separately.
• A unified surveillance system can help detect and prevent diseases that spread from animals to humans.
• This requires coordination across ministries dealing with health, agriculture, environment, and urban development.
• Joint protocols are needed to control antimicrobial resistance and vector-borne diseases.
• Such integration will help build climate-resilient health systems in the face of ecological change.

Task-Shifting to Allied Health Professionals

• Shortage of doctors can be addressed by expanding the role of trained allied health professionals.
• Nurse practitioners, community health officers, and pharmacists should be legally empowered to handle routine care.
• Clear boundaries should be defined so they manage basic screening and follow-ups.
• This allows doctors to focus on complex and critical cases.
• Decentralised care delivery improves access, especially in underserved areas.

Indigenising the Bio-Security Supply Chain

• India must reduce dependence on imported medical devices and pharmaceutical inputs.
• Domestic manufacturing of critical medical equipment and key drug ingredients should be encouraged.
• Dedicated MedTech parks and procurement policies should support Indian innovation.
• This approach promotes “health sovereignty” and supply security.
• A self-reliant system is crucial during global disruptions, pandemics, or trade restrictions.

Urban Health Missions for Vulnerable Populations

• Unlike rural healthcare, urban primary health systems remain fragmented.
• A focused Urban Health Mission is needed for slums, migrants, and peri-urban populations.
• Cities should identify health vulnerability zones to deploy mobile clinics and evening OPDs.
• These services would suit working populations who cannot visit hospitals during the day.
• Linking urban health services with municipal surveillance will help track disease trends in dense areas.

Digital Sovereignty and Interoperable Health Data

• The digital health mission should prioritise seamless data sharing across public and private hospitals.
• Standardised electronic health records are needed to avoid fragmented patient data.
• A federated data system can protect privacy while enabling continuity of care.
• Long-term patient histories will improve diagnosis and treatment decisions.
• Real-time data will help governments allocate health resources based on current disease patterns rather than outdated estimates.

Conclusion

India’s health system needs to move away from treating illness only when people fall sick and instead focus on strong, preventive public healthcare. This shift must be built on cooperation between the Centre and the States. Adequate public funding, better distribution of health workers, and a strong referral system through primary care are essential to reduce inequality and protect families from crushing medical expenses. By effectively using digital health platforms, promoting home-grown innovation, and adopting a One Health approach, India can make its healthcare system future-ready. In the end, health should be seen not just as welfare spending, but as a core economic investment that supports India’s long-term growth and demographic advantage.