India budget healthcare
People crowd outside a chemist store in New Delhi Saumya Khandelwal/Reuters

India's Finance Minister Arun Jaitley had a surprise trump card in his pack when he arrived in parliament to submit the country's annual budget 2018 on Thursday, 1 February. Billed as the world's largest healthcare programme, the flagship National Health Protection Scheme (NHPS) aims to reach as many as 500 million beneficiaries.

"Modicare", an obvious spin on the American insurance plan Obamacare, is a welfare measure that will offer insurance cover of up to £5,480 per family every year covering 100 million vulnerable families. This means 40% of the Indian population will be covered under the scheme. No cap on the family size has been mentioned.

"This will be the world's largest government-funded healthcare programme. My government has now decided to take health protection to a more aspirational level. Adequate funds will be provided for smooth implementation of this programme. The government is steadily but surely progressing towards the goal of universal health coverage," Jaitley said in his budget speech, which was squarely aimed at satisfying the lower strata of society.

With an allocated budget of £131m, the government plans to create 150,000 state-run centres across the country, chiefly in villages, to provide free essential medicines and diagnostic services. Through the newly launched proposal, the government intends to provide cashless, paperless and quality medical care to needy people, said the administration.

"The announcement in the area of healthcare is clearly path-breaking for the sheer size, coverage and the amount committed per family. This ushers India firmly into the next generation of social security as India moves aggressively towards a progressive developing economy," Milind Kothari, managing partner, head-tax and regulatory services, BDO India, told the Economic Times.

Data from the 2011 census will be pulled in order to earmark the beneficiaries. While the federal health ministry will closely monitor the plan, the measures will actually be implemented by various state governments. The behemoth healthcare programme has been introduced even as a scheme from last year's budget aimed at providing an annual health cover of up to £1,090 per family is yet to be implemented.

India, a $2.5tn economy, has one of the lowest public spending rates on public healthcare with just over 1% of the GDP – less than the global average. However, the biggest challenge for the government will be in implementing the scheme given the high costs of quality healthcare and the notorious private healthcare system. The government has not clarified whether the ambitious scheme would apply to services at state-run or private facilities.

"I don't know if 'Obamacare' was successful or not, but people will one day say 'Modicare' has been successful," said Jaitley in one of his television interviews following his budget speech in parliament.