Smaller Indian States Outpace Wealthy Giants in Healthcare Spending Priority

NEW DELHI — In a striking reversal of economic expectations, several of India’s smaller states—particularly in the northeastern region—are allocating a significantly larger proportion of their economic resources to healthcare than some of the country’s wealthiest and most industrialized giants. This key finding emerges from the newly released National Health Accounts (NHA) 2022-23 data, published by the Union Health Ministry on May 27, 2026. The report highlights a stark contrast in fiscal priorities across the nation, revealing that a state’s economic output does not automatically translate into a higher prioritization of public health infrastructure.

Key Findings: A Surprising Spending Pattern

According to the official data, Manipur leads the nation in prioritizing health, with its government health expenditure constituting 5.5% of its Gross State Domestic Product (GSDP), up from 4.6% in the previous fiscal year. Meghalaya follows closely at 4.4%, while Nagaland’s spending rose from 3.4% to 3.6%, and Mizoram reported 3.2%.

In sharp contrast, some of India’s largest and most economically dominant states devoted less than 1% of their GSDP to public health during the same period. Among Union Territories with legislatures, Puducherry stood out, reporting one of the highest health spending shares at 5%.

The table below highlights the divergence between the lagging economic giants and the leading smaller states:

Per Capita Disparities Tell Another Story

While GSDP percentages show how much a state prioritizes health relative to its economic size, per capita spending tracks the actual investment per individual. Here, too, the disparities are vast. Puducherry recorded the highest per capita government health expenditure at ₹10,675, closely followed by Mizoram at ₹9,800, Sikkim at ₹7,400, Manipur at ₹7,040, and Meghalaya at ₹6,843.

Among Union Territories without legislatures, Chandigarh reported the highest per capita government health expenditure nationwide at ₹20,985, followed by Lakshadweep at ₹10,594.

Among the larger states, Kerala reported one of the highest per capita public health investments at ₹3,592, though this represents a notable decline from ₹4,338 in 2021-22. Over the same period, Karnataka’s per capita spending fell from ₹3,259 to ₹2,333.

Conversely, Uttar Pradesh reported one of the lowest per capita expenditures among major states at ₹1,419, followed by Jharkhand at ₹1,536 and Madhya Pradesh at ₹1,827. However, due to its massive population base, Uttar Pradesh recorded the country’s highest total government health expenditure at ₹33,352 crore, followed by Maharashtra at ₹30,537 crore and Tamil Nadu at ₹21,517 crore.

National Context: Progress Amid Inequality

The NHA 2022-23 represents the tenth report prepared by the National Health Accounts Technical Secretariat (NHATS) using the globally recognized System of Health Accounts (2011) framework. At the national level, the data points to steady, long-term structural progress:

• GDP Share: Government Health Expenditure (GHE) rose from 1.15% to 1.43% of GDP between 2013-14 and 2022-23.

• Per Capita Growth: In per capita terms, public health spending increased nearly 2.7 times, from ₹1,042 to ₹2,786.

• Pool Share: The share of GHE within Total Health Expenditure (THE) increased by almost 15 percentage points, moving from 28.6% to 43.7%.

• Declining Out-of-Pocket Burden: Out-of-Pocket Expenditure (OOPE)—what individuals pay directly at the point of care—declined sharply from 64.2% to 43.4% of total health costs over the decade.

• Social Security Cushion: Social Security Expenditure on healthcare, which includes government-funded health insurance schemes, increased from 6% to 9.9%.

Expert Commentary: What the Data Reveals

Independent public health analysts suggest that these figures expose deep, systemic inequalities in how state governments value healthcare. Health economists observe that the data underlines a continuing, heavy dependence of larger states on private medical networks, despite a growing public demand for robust government infrastructure.

“We are seeing an economic paradox,” says Dr. Arisudan Bhargava, a Delhi-based health policy analyst not involved in the compilation of the NHA report.

“Wealthy states often rely on their highly developed private healthcare sectors to absorb patient loads. However, this shifts the financial burden directly onto the consumer. Smaller states, particularly in the Northeast, lack a sprawling private sector, forcing the state to step in as the primary caregiver and funder.”

Experts also note that 2021-22 was an anomalous financial year due to intensive emergency spending, massive COVID-19 vaccination drives, and rapid pandemic-related infrastructure expansions. This explains why states like Kerala and Karnataka saw drops in their health spending ratios in 2022-23 as spending normalized.

However, some major states have fought to maintain high budgetary allocations; West Bengal allocated 8.5% of its total government expenditure towards health, followed closely by Kerala at 8.3% and Uttarakhand at 8.2%.

Public Health Implications and the NCD Burden

The timing of this data release is critical as India faces a rapid epidemiological shift. Non-communicable diseases (NCDs)—including cardiovascular diseases, cancers, chronic respiratory diseases, and diabetes—now account for approximately 64.93% of all deaths in India, up from 35.87% in 1990.

The Union Budget 2026 explicitly flagged this growing burden of diabetes, obesity, and cancer. Because NCDs require long-term management, regular diagnostic screenings, and ongoing medication, they place a heavy financial strain on families.

To combat this, central initiatives like the National Health Mission (NHM), Ayushman Bharat (AB-PMJAY), and the Pradhan Mantri Bhartiya Jan Aushadhi Pariyojana (PMBJP) aim to improve accessibility. Nationally, government expenditure on primary healthcare has more than doubled, rising from ₹0.5 lakh crore to ₹1.4 lakh crore over the decade, establishing a vital baseline defensive line against these chronic conditions.

Limitations and Counterarguments

While the macro trends appear encouraging, health policy experts urge caution. The steep historical drop in out-of-pocket expenditure from 64.2% to the current 43.4% was heavily influenced by temporary pandemic-era interventions.

Furthermore, even with this progress, Indian citizens continue to pay more out-of-pocket for healthcare than residents of many neighboring developing nations. In international purchasing power parity (PPP) terms, individual out-of-pocket healthcare spending stood at 121 international dollars in 2022, placing India 64th globally.

Crucially, data shows that pharmacy purchases—the cost of medicines and daily pharmaceutical supplies—remain the single biggest driver of personal healthcare spending in India, indicating that access to free or subsidized diagnostic testing and medications remains highly uneven.

What This Means for Your Daily Health Decisions

For health-conscious citizens, the NHA report offers critical, practical takeaways:

• Geography Shapes Affordability: Your access to quality, publicly funded healthcare varies dramatically depending on your state of residence, completely independent of that state’s overall GDP.

• Evaluate Private Safety Nets: If you reside in wealthier states like Maharashtra, Karnataka, or Telangana, you are statistically more likely to utilize private healthcare systems. Because out-of-pocket expenses are higher in these zones, maintaining comprehensive private health insurance is a vital financial safeguard.

• Emphasize Preventive Care: With public spending low in several major states and NCDs on the rise, taking personal charge of your health through a balanced diet, regular physical activity, and routine health screenings is the most effective way to minimize future medical risks.

Looking Ahead

The stark interstate inequalities highlighted by the NHA 2022-23 report underscore the urgent need for structural policy reforms in healthcare financing equity. As India grapples with a dual burden of lingering infectious diseases and skyrocketing NCD rates, balanced and sustained resource allocation across all states will be critical to achieving true universal health coverage.

Whether under-allocating states will choose to reprioritize their budgets in the coming years remains an open and vital question for policymakers and citizens alike.

Medical Disclaimer

This article is for informational purposes only and should not be considered medical advice. Always consult with qualified healthcare professionals before making any health-related decisions or changes to your treatment plan. The information presented here is based on current research and expert opinions, which may evolve as new evidence emerges.

References

• https://health.economictimes.indiatimes.com/news/policy/smaller-states-beat-richest-on-healthcare-spending/131383141?utm_source=top_story&utm_medium=homepage