The Indian government has been collecting a special health cess—a tax levied on income and corporate taxes to fund healthcare. The intention behind this cess, introduced in 2018, was to increase the resources available for health programmes. The idea was that this additional money would add to the regular health budget and strengthen public health spending.
Spending on Healthcare Has Fallen
However, health expenditure has actually declined over the years even as cess collections have grown. Before the health cess was imposed, the government allocated 2.4% of its total expenditure to health in 2017–18. In contrast, in the 2026–27 budget estimates, health’s share has dropped to 1.9% of total spending and to just 0.26% of GDP. Without including cess money, health would account for only 1.3% of total government expenditure, barely more than half of the allocation a decade ago.
Cess Masks a Deeper Decline
As per Times of India, the health cess now makes up over 30% of the total health allocation, yet it has not prevented a real decline in the share of overall spending. If the cess portion were removed from current figures, the share of health in GDP falls further to 0.18%, a significant drop from the 0.32% recorded in 2019, right before the COVID-19 pandemic.
National Health Policy Targets Are Unmet
The National Health Policy had aimed to raise public health spending to 2.5% of GDP by 2025, with the central government contributing around 35% of that figure. Yet current allocations are far below this goal. Even the total budgeted health spending (including cess) this year would have been about ₹1 lakh crore, instead of the roughly ₹1.2 lakh crore it would have been if the 2017–18 allotment share had been maintained.
How Cess Funds Are Managed
Experts quoted in the article explain that the health and education cess does not directly increase money from the consolidated fund of India. Instead, it flows into a separate reserve and lacks obligatory parliamentary accountability or guaranteed transfers to states. The government decides each year how much of the cess goes into the Pradhan Mantri Swasthya Suraksha Nidhi (PMSSN), a fund set up to hold the health portion of the cess.