Pharmaceuticals – Rising Budget Allocations Face Delays and Underutilisation Challenges

Pharmaceuticals – Government spending on key chemical sectors has grown steadily in recent years, but a series of parliamentary reports suggest that much of this funding is not being fully utilised due to persistent administrative and procedural delays. Four reports presented in Parliament in March by the Standing Committee on Chemicals and Fertilisers underline a pattern of increasing allocations alongside implementation bottlenecks.

Budget Growth Outpaces Project Execution

The pharmaceutical sector has seen a notable rise in financial support. Budget Estimates climbed significantly from Rs 2,244.15 crore in 2022–23 to Rs 6,920.20 crore for 2025–26. Despite this expansion, actual utilisation has not kept pace. Revised Estimates show a reduction of around 15–17 percent, largely because several infrastructure-related projects failed to progress within scheduled timelines.

Officials attribute these shortfalls to delays in obtaining mandatory clearances and slower-than-expected participation in flagship initiatives such as production-linked incentive schemes and bulk drug park projects. Together, these programmes account for a substantial portion of the sector’s total spending, making their slow progress a key concern.

Funding Adjustments in Chemicals and Petrochemicals

In the chemicals and petrochemicals segment, the financial outlook presents a slightly different scenario. For the 2026–27 financial year, the department initially projected a requirement of Rs 199.76 crore. However, after review by the finance ministry, the final allocation was set at Rs 185.72 crore.

This downward revision is linked to a combination of factors, including reduced funding needs from autonomous bodies and the absence of exceptional expenditures that had influenced previous budgets. Earlier allocations had included one-time financial support measures such as loans to public sector undertakings, which are not part of current projections.

Fertiliser Sector Expands Production Capacity

The fertiliser sector shows strong growth in domestic production capacity, even as structural challenges persist. Urea production increased from 239 lakh metric tonnes in 2018–19 to 307 lakh metric tonnes in 2024–25. Similarly, output of phosphatic and potassic fertilisers rose from 175 lakh metric tonnes to 214 lakh metric tonnes over the same period.

While these figures indicate progress in local manufacturing, the sector continues to depend heavily on imports for essential raw materials. Additionally, government subsidies remain a crucial component in maintaining price stability and ensuring distribution across the country.

Common Bottlenecks Across Sectors

Across all four reports, the parliamentary committee highlights recurring administrative hurdles that affect the effective use of allocated funds. Delays in tendering processes, slow decision-making, and limited coordination between departments are cited as key obstacles.

These systemic issues have led to a gap between policy intent and on-ground execution. Even as the government expands schemes aimed at reducing import dependence and strengthening domestic capacity, the pace of implementation remains uneven.

The findings suggest that while financial commitments are increasing, addressing procedural inefficiencies will be critical to ensuring that these investments translate into tangible outcomes. Without improvements in coordination and project execution, the benefits of higher allocations may continue to fall short of expectations.