In the Indian public policy discourse, ‘mental health’ is gradually becoming mainstream. The Union Budget for FY 2026-27 followed with visible signals—announcing a second National Institute of Mental Health and Neurosciences (NIMHANS) for North India, trauma centres in district hospitals and the training of allied health professionals, including counsellors. The Economic Survey of FY 2024-25 as well as FY 2025-26 flagged mental health as a growing public health and development concern, particularly among the youth.
On the surface, this appeared like progress. But as the dust settled, a familiar, troubling pattern emerged. While the government’s rhetorical commitment to mental health reached an all-time high, the fiscal commitment remained stuck in a cycle of stagnation and institutional bias.
Mental health expenditure continues to account for 1% of the Ministry of Health and Family Welfare’s (MoHFW) budget, a figure that has remained largely unchanged over the years. This is despite the growing evidence of the scale and complexity of India’s mental health burden, from rising suicide rates to increasing distress linked to economic and social precarity. In policy terms, this signals a clear misalignment: mental health now features prominently in government narratives, but it has yet to translate into meaningful fiscal prioritisation.
The gap is not only of scale but also of structure.
More institutions, but no clear path to everyday care
A significant share of the funds (95%) continues to flow towards tertiary institutions like NIMHANS and Lokpriya Gopinath Bordoloi Regional Institute of Mental Health. The announcement of NIMHANS-2 and upgradation of existing psychiatric institutions reinforces this trajectory, expanding specialised capacity within an institutional model.
It is worth noting that there is still no budgetary allocation for NIMHANS-2. While apex institutions play a role in training, research, and complex care, when the investment remains concentrated at the top of the system, it addresses only a fraction of the needs. For most people, access to mental healthcare depends not on apex institutions but on whether services exist in their communities.
At present, at the community level, mental health systems remain fragmented and opaque.
Shifting patterns of financing
Programmes such as the District Mental Health Programme (DMHP), which are intended to anchor decentralised community care, continue to operate without predictable and transparent funding. While the DMHP now operates across 767 districts, its funding is no longer clearly available as a line item in the Union Budget but is embedded under the National Health Mission.
Similarly, the components under the National Mental Health Programme (NMHP) have been subsumed under a larger umbrella programme, making it increasingly difficult to track allocations specific to mental health. This leads to a lack of budgetary transparency, which hampers the ability to assess whether the resources are sufficient, well distributed and effectively utilised.
The recent shift in digital mental health financing further highlights this imbalance.
The National Tele Mental Health Programme (Tele Manas), launched to bridge the gap of mental healthcare in rural India, has seen a reduction in funding from Rs 80 crore to Rs 50 crore. One reason could be low budgetary utilisation. More significantly, the financing model has shifted from a fully centrally funded initiative to a centrally sponsored scheme under the National Health Mission, which means that states would also be responsible for spending on the scheme as per a pre-decided ratio instead of the whole funding being allocated through the Union government.
In principle, decentralisation enables flexibility. However, in a vast and unequal country like India, it risks uneven implementation patterns. Tele-Manas was designed to bridge gaps in access, particularly in underserved regions. When support from the Centre recedes without ensuring uniform state capacity, the programme's reach becomes contingent on local fiscal strength. Ironically, this can result in the very disparities it was supposed to address.
Similar patterns are observed in other areas critical for mental well-being.
Shifting patterns of financing in allied areas
A similar restructuring is unfolding outside the health sector that has significant implications for mental health outcomes. The relationship between economic vulnerability and mental health is well established. Unemployment, debt, and income instability are powerful drivers of psychological distress. In this context, programmes like the Mahatama Gandhi National Rural Employment Guarantee Act (MGNREGA) are not just economic interventions but protective factors for mental well-being.
The replacement of MGNREGA with Viksit Bharat Guarantee for Rozgar and Ajeevika Mission (Gramin) (VB G RAM G) marks a significant shift in how rural livelihood security is conceptualised. The earlier framework was anchored in a demand-driven, right-based guarantee of 100 days of work. The new model extends the duration to 125 days but introduces a budget cap design, whereby any expenditure beyond the normative allocation has to be borne by the states, in addition to a larger share in expenditure than under MGNREGA.
The shift alters the function of the programme as a social safety net. The demand-driven entitlement functioned as a stabiliser. VB G RAM G, in contrast, introduces limits, shifting the programme away from its role of buffer against volatility. The mental health implications of this shift are significant.
What is notable is that these linkages remain largely absent from budgetary discourse. Livelihood programmes are designed as economic interventions, health programmes as clinical responses, and social protection schemes as welfare measures. However, these outcomes are deeply interconnected.
This has significant implications for rural communities.
This fragmentation is particularly visible in the case of young people. Rising student suicides point to a convergence of pressure – interpersonal, academic, socio-economic and cultural. 66% of suicides in 2023 were in the poorest socio-economic strata. Yet the response remains limited, often reactive, and insufficiently resourced.
That brings us to the question: What kind of systems should India build?
A more coherent approach would be to rebalance priorities towards community-based systems. This includes predictable and transparent funding to the DMHP, integration of mental health into primary health, and development of local service networks for sustained support. Provision of mental healthcare services through over 1.75 lakh Sub-health Centres (SHCs) and Primary Health Centres (PHCs) is a step in the right direction.
Equally important is embedding mental health into institutions that shape daily life – schools, colleges and workplaces. Without structured support for these spaces, distress is often identified late. Manodarpan, an initiative launched by the Ministry of Education to provide mental health and psychosocial support to students, teachers and families, is not a separate line item in the Union Budget. According to a Right to Information (RTI) response, it was allocated a meagre budget of Rs 6 crore in 2025-26.
The government’s inertia in responding swiftly has necessitated intervention by the Supreme Court, which issued binding guidelines for educational institutions to strengthen student suicide prevention and response systems.
Social protection schemes and disability support programmes both shape the conditions in which mental health outcomes are produced. The Scheme for Implementation of the Rights of Persons with Disabilities Act (SIPDA), for instance, provides indirect support to persons with psychosocial disabilities. But allocations remain modest relative to the scale of need.
At present, the contours of the system appear uneven. There is growing investment in specialised institutions and episodic crisis care, but insufficient attention to everyday systems that enable people to access support where they live. Without strengthening these foundations, even the most advanced tertiary infrastructure will remain inaccessible to large segments of the population.
A more effective approach will require a fundamental rebalancing of priorities and a broader recognition of care that extends beyond formal clinical settings. Peer support networks, community-based organisations, and local crisis response systems often function as first points of contact, particularly in resource-constrained settings. Yet, they remain largely invisible within formal financing frameworks.
Local crisis interventions, including district-level response mechanisms and integration with emergency services, must also be institutionalised. Schools and educational institutions need to move beyond awareness campaigns towards building functional mental health ecosystems with trained counsellors and structured support pathways. Workplaces, too, must be recognised as key sites for mental health intervention.
None of this can be achieved through a health budget alone. Mental health must be embedded across sectors – education, employment, and social welfare. Future budgets, therefore, must move beyond incremental increases and provide greater clarity, stability, and integration on how the allocations are structured.
This includes transparent and adequate financing for community-based programmes, sustained central support for national access platforms like the Tele-Manas, the recognition of livelihood systems as an integral part of mental health budgets, and mechanisms to track access, quality and equity.
In short, while the conversation has moved forward, until financing catches up, mental well-being will remain inaccessible to many.
Sayali Mahashur is a Research Associate and Shubhda Sharma is a Project Officer and Research Associate, both at the Centre for Mental Health Law and Policy, Indian Law Society, Pune. Views expressed here are the authors’ own.