Background and Purpose of health Cess
In 2018, the government introduced a special health and education Cess.
The main objective was to increase funding for healthcare and education.
It aimed to support poor (BPL) and rural families with better health services.
Public perception suggested that this cess would expand the health budget.
It was expected to strengthen hospitals, schemes, and infrastructure.
Reality of Budget Allocations
Budget data indicate a different trend from public expectations.
Health sector spending as a share of total government expenditure has declined.
In 2017–18, health and family welfare received about 2.4% of total expenditure.
Budget estimates for 2026–27 show this falling to around 1.9%.
This suggests a proportional reduction despite cess collections.
Health Spending Relative to GDP
Health spending as a share of GDP has also slightly decreased.
It declined from about 0.28% of GDP to roughly 0.26%.
Without including cess revenue, it would be near 0.18% of GDP.
This shows core health allocations are weaker than they appear.
Role of Cess in health Budget
Cess collections form nearly 30% of the current health budget.
Without cess, health spending would be about 1.3% of total expenditure.
That is less than half of the 2017–18 proportion.
This indicates cess is offsetting cuts rather than adding new funds.
Gap from National health Policy Targets
The National health Policy set a target of 2.5% of GDP for health spending.
The Centre’s expected share was about 0.9% of GDP.
Current central spending is far lower at around 0.26% of GDP.
This is nearly three times below the stated target.
Estimated vs Actual Spending
If the earlier 2.4% budget share continued, spending would be higher.
The estimated 2026–27 health allocation should be about ₹1.2 lakh crore.
Actual allocation is closer to ₹1 lakh crore, even with cess included.
Transparency and Utilization Concerns
Experts argue that the Cess creates an illusion of higher spending.
Funds go into reserve accounts outside the main budget framework.
Transparency and performance tracking are limited.
Earlier collections reportedly went to general revenue instead.
Around ₹20,600 crore collected for health remained unused.
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