By- Dr. Dhamodharan M (Assistant Professor) and Sri Shamicsha M (Research Scholar),
Department of Psychology, Easwari School of Liberal Arts, SRM University AP
The budgetary proposal of the financial year 2026-27 presents a unique opportunity for the researchers to evaluate whether the increased discourse on mental health has been translated into significant financial investment. When compared to the previous 2025-26 budget, it indicates that, despite the possible strengthening of the discursive announcements, the direction of allocation has remained largely unchanged.
Direct mental-health spending that the Ministry of Health and Family Welfare (MoHFW) has reported in the 2025-26 cycle is about 1,004 crore rupees, it is nearly one percent of the entire health budget. This expenditure was massively concentrated in centrally funded tertiary institutions; relatively small amounts were channelled towards tele mental health programmes, and disclosure as to district-level spending was minimal. It is a trend indicative of an institutionalised prejudice that places a priority on apex centres and makes community-based systems non-transparent and underfunded. The 2026-27 budget does not significantly deviate toward the same direction. Even though it announces an increase of tertiary infrastructure, most notably by opening another NIMHANS-like campus in the north of India and strengthening mental-health institutions in the region, overall mental-health expenditure in the health budget remains at about the same level as it was the year before. Continuity: Rather than a significant expansion, there is continuity in proportional terms. Following three salient observations are identified.
Mental Health in the margin
To start with, the percentage allocation. Although there has been an increased level of awareness of the post-pandemic mental-health challenge and recurrent recognition in economic surveys that mental well-being is the foundation of productivity and demographic advantage, the proportion of spending on mental health has not increased accordingly. The percentage for 2025-26 is approximately one per cent; 2026-27 is the year when this stagnation continues. The increment in real terms is at best marginal when inflation and population growth are considered.
Institutional Growth Without Community Reach
Second, the structure of expenditure. Direct mental-health expenditures were nearly concentrated in tertiary institutions like NIMHANS as well as centrally funded facilities (totalling almost ninety percent) in 2025-26. Tele mental health services (Tele MANAS) were allocated less than in the previous years, and there were still disproportionate utilisation rates. The District Mental Health Programme funding was folded under other broader National Health Mission categories, and hence transparency was lost, and it was difficult to determine whether the decentralised services were being strengthened or diluted. The 2026–27 budget restates its institutional expansion agenda. The emergence of new campuses may increase the capacity to train specialists regarding training and research but does not essentially solve the accessibility dilemma. Most Indians, and in rural and peri-urban areas in particular, are directly involved with primary and district-level health systems. Without ring-fenced distributions of community-based mental-health service, the further institutional growth would lead to an enhanced top-heavy system where the excellence is replicated in the centre and the peripheral services are limited.
The Limits of Digital Incrementalism
Third, a digital mental health programme. During the 2025-26 period, Tele MANAS funding is reduced compared to the previous year, despite the previously reported growth in call volumes. The programme had an indication of state involvement in mental-health crises. The 2026-27 budget has tele-mental health as an ongoing effort but does not portend significant scaling and integration changes. The dependency on digital platforms is innovative but puts the development of a model of crisis response and continuity of care at risk unless deeply ingrained in the district health networks. The lack of a significant financial redesign is particularly acute when put into epidemiological context. It has been estimated that on any day some ten to thirteen per cent of the Indian population have a diagnosable mental condition, and the treatment gap, where treatment is not received for a few disorders, is estimated to be seventy to ninety per cent. Comparatively, several OECD countries allocate a much larger share of their health spending to mental-health services and include them within primary-care systems. India’s incremental budgeting appears to be misaligned with both domestic burden and global best practices.
This is further revealed in the comparison of the 2025-26 budget and 2026-27 budget, which brings out a political-economic pattern. Mental health is becoming a framing of economic consequences associated with labour productivity, youth wellbeing, and demographic advantages, but financial expenditures do not reflect this framing. This disjunction indicates that mental health is symbolically considered but is not institutionally entrenched in development planning. Also, the social determinants of mental health, including economic insecurity, unemployment, agricultural distress, academic pressure, and gender-based violence, are not clearly connected to mental-health financing during either of the two budget years. There are economic distress and suicides that are associated with a quantifiable percentage; however, cross-sectoral financial integration is not well established. Mental health remains a subject of separation, which has not been regarded as an inter-ministerial development priority in the health ministries.
The Unfinished Mental Health Agenda
In turn, the consistency in the two budgets indicates gradual administrative development and not a radical change of policies. The 2026-27 budget is based on one of the last years but does not significantly change its design. Without a conscious shift to proportional allocation, plain-sighted funding of district programmes and a combination with social welfare policy, the treatment gap will not be reduced much. Mental health plays a role in fundamental support of economic growth and social stability. Budgets in the future will have to go beyond marginal increments. One structural commitment would involve (i) raising mental health to a greater proportion of total health spending; (ii) providing ring-fenced and publicly observable allocations of services at the district level; and (iii) incorporating mental health indicators in employment, education and social protection programmes.
Finally, a comparison of the 2025-26 and 2026-27 budgets reveals that recognition has changed, but redistribution has not. Incrementalism can also maintain development, but in mental health budget allocation, it is unlikely to bridge a large treatment gap. A redefinition of financial focus is still required for mental health.
