The Union Budget 2026-27 projects an increase in health allocation from Rs 99,859 crore in the previous fiscal year to Rs 1,04,559 crore. At first glance, this appears to signal renewed governmental commitment to public health. However, a deeper examination of expenditure trends, audit findings, and fiscal management practices reveal a troubling reality. The health budget continues to lack accountability, it prioritises industry over people, and overlooks the foundational needs of India’s public health system.Over the past several years, the people’s health agenda has steadily receded from the centre of policy discourse. Instead of strengthening public provisioning and investing in primary healthcare systems, policy emphasis has increasingly shifted toward insurance-based financing and expansion of private sector participation. The language of health rights and strengthening public healthcare systems has gradually been replaced with the language of market, investment, and industry growth.This shift is particularly concerning in the post-COVID era. The global pandemic exposed the fragility of health systems worldwide and underscored the indispensable role of robust public health infrastructure. Many countries responded by strengthening primary healthcare networks, disease surveillance, and public hospitals. India, however, continues to move in the direction of insurance expansion and privatisation, despite evidence that such models cannot substitute for strong public systems.While the allocation shows an increase, the real picture becomes clear when adjusted for inflation and rising healthcare needs. The modest rise in nominal allocation does not translate into a substantial expansion of services. Analysis of Comptroller and Auditor General (CAG) audit reports and expenditure trends over the past five years reveals stagnation –and in real terms, a decline – in spending on public health.Even more alarming is the persistent pattern of under-utilisation of allocated funds. Between FY 2019–20 and FY 2023–24, the Ministry of Health and Family Welfare surrendered an extraordinary Rs 1,32,749 crore. This is not a marginal administrative lapse; it is a deep rooted systemic issue. CAG Audit Reports on Union Government Finance Accounts have consistently shown that health sector allocations and supplementary grants have lapsed at rates ranging from 11 to 14% in recent years.Such large-scale lapsing indicates serious shortcomings in planning, implementation capacity, and financial governance. When allocations repeatedly remain unspent, it weakens the credibility of claims that fiscal constraints prevent higher health spending. The problem is not merely the size of the budgetary allocation but also the failure to effectively utilise what is allocated.Meanwhile, core public health priorities have remained neglected even after Union Government introduced Health and Education Cess. The budget 2026-27 gives attention to pharmaceuticals and AYUSH, which are undoubtedly important sectors. However, primary healthcare infrastructure, district hospitals, disease prevention programmes, and the public health workforce continue to receive inadequate support. India’s epidemiological transition, rising burden of non-communicable diseases, recurring outbreaks, and deep regional inequities demand sustained investment in primary and preventive care. Without strengthening the base of the health pyramid, expansion at the top will not deliver equitable outcomes.The stagnation in public health spending becomes even more evident when budgetary allocation is examined as a share of GDP. For the past three years, budgetary allocation on health has ranged between 0.31% (2023–24) and 0.29% (2024–25 and 2025–26) of Gross Domestic Product (GDP). This is far below the long-standing national policy aspiration and international recommendation of allocating at least 5% of GDP to health. The gap between commitment and reality remains vast.The issue of accountability becomes sharper when examining the Health and Education Cess. According to CAG findings, collections under this cess increased significantly – from Rs 41,310 crore in 2018-19 to Rs 71,159 crore in 2023-24. In the same period, total cess and surcharge collections rose dramatically, reaching Rs 4.88 lakh crore in 2023–24. These collections constituted 14.09% of Gross Tax Receipts in the fiscal year 2023-24, as reported by the CAG of India.Importantly, cess and surcharge collections are not divisible with States (except GST Compensation Cess). This means that while States shoulder the primary responsibility for delivering healthcare services, a growing share of tax revenue is retained at the Union Government level. This fiscal centralisation has grim implications for cooperative federalism and for States’ ability to strengthen their own public health systems.CAG has repeatedly criticised the Union Ministry of Finance for the mis-management of receipts under special purpose cesses. Despite being earmarked for specific objectives such as health and education, cess receipts have not always been deposited into dedicated accounting heads in the Public Accounts of India. Instead, substantial amounts have been retained in the Consolidated Fund of India.When earmarked funds are merged with the Consolidated Fund, it becomes difficult to track whether they are actually being used for their stated purpose. Transparency and traceability are essential features of accountable public finance. The absence of clear ring-fencing raises legitimate concerns about whether Health Cess collections are being fully deployed for strengthening public health infrastructure.The Union Government must clarify why Health Cess receipts were not transferred to the Public Accounts during 2018-19, 2019-20, and 2020-21 and why the dedicated accounting head was not created within Public Accounts for three years! The finance minister must answer why cess receipts under Health component were not transferred to Public Accounts even in 2021-22, despite Cabinet approval for creating a dedicated Reserve Fund, called Pradhan Mantri Swasthya Suraksha Nidhi, belatedly in March 2021.As on March 31, 2023, the amount not transferred to the Reserve Fund (PMSSN) stood at Rs 57,752.50 crore. However, Union Govt transferred only Rs 18,339.27 The shortfall in transfer rose from Rs 39,413.23 crore as on 31st March 2023 to Rs 43,426.35 crore by 31st March 2024. When such substantial sums remain in the Consolidated Fund rather than in the designated reserve fund, citizens cannot be assured that the cess collected in the name of public health is being exclusively used for that purpose.The consequences of persistent underinvestment and fiscal opacity are visible across the country. Public health infrastructure remains uneven. Human resource shortages continue to plague rural and underserved areas. Preventive and curative services struggle for adequate support. Insurance coverage expansion, while helpful in certain contexts, cannot compensate for weak primary care, insufficient public hospitals, and fragile surveillance systems.India stands at a critical juncture. It can continue with incremental increases that create an impression of progress while structural gaps remain unaddressed. Or it can undertake meaningful and lasting systemic reform in health budget planning and fiscal governance.This requires a substantial increase in public health expenditure to at least 5% of GDP. It requires ring-fencing of Health Cess exclusively for public health purposes, with transparent reporting and utilisation mechanisms. It requires strengthening States’ fiscal capacity, rather than concentrating resources at the Centre. Most importantly, it requires recognizing that collections alone cannot substitute for real, sustained investment in public healthcare systems.Health is not merely a sectoral expenditure; it is a social and constitutional commitment. Without accountability, transparency, and adequate investment, the promise of universal and equitable healthcare will remain an unfulfilled and distant dream. The Health Budget must move beyond optics and deliver structural reform that places people—not industry—at the centre of policy.Himanshu Upadhyaya is Associate Professor at Prestige University, Indore. Amulya Nidhi is national coordinator of Jan Swasthya Abhiyan – India (JSAI).