Despite collecting a cess specifically for health, the Centre’s spending on health is now lower than it was before the cess was imposed, both as a share of the total budget and as a proportion of the GDP.Before the health cess was introduced in 2018, the allocation for health was 2.4% of total govt expenditure in 2017-18. Remove the cess component and the share of health in the GDP is 0.18%.The target of the National Health Policy was 2.5% of the GDP by 2025 of which 35% was supposed to be the share of central govt, which works out to 0.9% of the GDP or Rs 3.5 lakh, over three times the current allocation.If we were to strip the cess money off the revised Budget allocation for 2025-26 which was Rs 92,926 crore, it would be Rs 78,279 crore. It is entirely the discretion of the central govt,” said economist Dr Varna Sri Raman.In 2018, then finance minister Arun Jaitley introduced the health cess, saying the 3% education cess was being increased to 4% health and education cess “in order to take care of the needs of education and health of BPL and rural families”.“Though it is assumed the additional 1% is for health, the Finance Act doesn’t prescribe how the 4% is to be divided between health and education.
Author: Rema Nagarajan
Published at: 2026-02-03 22:17:10
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