India’s budgetary commitment to health and education has remained largely unchanged as a share of GDP over the past six years, raising concerns about long-term human capital development despite the country’s strong economic growth. Data from the Economic Survey 2025–26 shows that general government expenditure on education has declined from 2.9 percent of GDP in FY20 to an estimated 2.7 percent in FY26. Health spending has risen only modestly over the same period, from 1.4 percent to 1.8 percent of GDP.
Education expenditure, which includes allocations for sports, arts and culture, has been flat at 2.7 percent of GDP since FY22. This trend suggests that fiscal prioritisation has not shifted meaningfully toward the education sector, even as policymakers emphasise skilling, employability and the demographic dividend. While nominal budget allocations have increased, their relative weight in the economy has not kept pace with GDP growth, effectively limiting the scope for large-scale expansion in public education services.
Health spending has seen some improvement since the pandemic years, when emergency allocations temporarily boosted outlays. Current expenditure covers medical and public health services, family welfare programmes, and water supply and sanitation. However, the rise from 1.4 percent to 1.8 percent of GDP over six years remains modest, particularly in light of India’s large population and persistent gaps in primary healthcare access, nutrition, and disease prevention.
The stagnation becomes more pronounced when India’s spending is compared with that of its BRICS partners and global peers. According to World Health Organization data, India’s health expenditure in 2023 was less than half that of Brazil, which spent around 10 percent of GDP on health, and South Africa, at roughly 9 percent. It also lagged behind Russia at about 7 percent and China at approximately 6 percent. These comparisons highlight the scale of the gap between India and other major emerging economies, many of which have expanded public health investment as part of broader social protection strategies.
Lower public spending does not necessarily imply weaker outcomes, but it does place greater pressure on households. In India, high out-of-pocket health expenses remain a structural issue, contributing to financial vulnerability and medical impoverishment. In education, limited public investment risks constraining improvements in teacher training, infrastructure, and learning outcomes, particularly in rural and low-income areas. This is especially relevant as India seeks to position itself as a global manufacturing and services hub that depends on a skilled and healthy workforce.
Fiscal constraints partly explain the pattern. Competing demands from infrastructure, defence and debt servicing have narrowed the room for large increases in social sector spending. At the same time, the government has pursued targeted schemes in health insurance and digital education, aiming to improve efficiency rather than scale. However, critics argue that without a stronger budgetary push, such measures may struggle to deliver systemic change.
As India continues to grow and assert itself within BRICS and the global economy, its comparatively low investment in health and education stands out. Sustained economic expansion has increased the size of the fiscal pie, but the relative slices allocated to these sectors have remained small. The challenge ahead is whether future budgets will translate rhetorical commitment to human capital into a measurable shift in spending priorities, or whether India will continue to trail its peers in the social foundations of growth.
