Mental health in India has long battled silence, stigma, and systemic neglect. Today, however, it’s not just a matter of personal well-being, it has become a growing financial and public health crisis. Even as mental health awareness gains ground, access to affordable care remains a challenge for many. Rising treatment costs, limited insurance coverage, and underfunded public services are placing a massive burden on individuals and families, particularly among India’s working and middle classes. The cost of staying mentally well is steadily increasing, and people are paying not just in rupees but also in quality of life.

Numbers That Speak Louder Than Words

Recent studies paint a troubling picture. For Indian households with even one member living with a mental illness, the average monthly out-of-pocket healthcare expenditure is over ₹2,000, according to data from the National Sample Survey Office (NSSO) 75th round (2017-18). This includes households primarily accessing public sector health facilities, though costs are generally higher in the private sector. While ₹2,000 may not seem significant at first glance, in a country where the median per capita income is around ₹10,000 per month, this quickly becomes unsustainable.

These expenses—covering consultation fees, medication, and travel—are often paid directly by families without reimbursement, a burden that worsens with hospitalization. The average cost for a single psychiatric or neurological hospital admission is approximately ₹27,000, not a monthly figure, but per episode. Public hospitals charge around ₹7,200 per admission, while private facilities can exceed ₹40,000. Importantly, these are rarely one-time costs. Mental health conditions often require long-term support, repeat hospitalizations, lifelong medication, and continuous therapy.

Beyond these direct expenses, many families face an additional, invisible cost: the loss of a dedicated caregiver. In numerous cases, a family member—often a woman—must give up paid work to provide full-time care for their loved one. This results in a double economic impact: ongoing healthcare spending and the forfeiture of another income. These losses are rarely quantified in national statistics but significantly shape the financial and emotional well-being of households.

As a result, nearly 20% of families with a member who has a mental illness are pushed below the poverty line, primarily due to health-related spending. According to the Public Health Foundation of India and WHO, healthcare expenses now account for more than 20% of total household consumption in many Indian states, qualifying as catastrophic health expenditure. This term is defined by the WHO as health spending that threatens a household’s ability to maintain basic living standards.

Mental illness, which is often chronic, recurring, and stigmatized, is a major driver of this crisis—not just due to treatment costs but because it alters the very structure of a family's economic life.

Insurance Gaps: Laws Exist, but Implementation Lags

The Mental Healthcare Act of 2017 was widely celebrated because it recognized the need to treat mental health on par with physical health in insurance policies. However, data shows a significant gap between legislation and implementation.

A study by Chatterjee, Sinha, and Jain (2024) reviewed 235 insurance policies and found that only 37.5% provided mental health coverage, while 51% did not. Even among those offering coverage, the benefits were often limited or vague. Many plans excluded outpatient consultations, therapy sessions, and rehabilitation services, all of which are essential for mental illness treatment. As a result, despite legal provisions, families remain financially exposed and without adequate support.

This incomplete insurance coverage leaves caregivers and patients in a vulnerable position. Mental health treatment is not just about hospitalization; it often involves long-term engagement, counseling, and medication. Without full coverage, many families must shoulder these costs entirely on their own.

Why Is the District Mental Health Programme (DMHP) Underfunded?

At the heart of India’s mounting mental healthcare expenses lies a quietly devastating failure: the breakdown of community-level mental health infrastructure, particularly the District Mental Health Programme (DMHP).

Originally envisioned as a scalable, decentralized model, the DMHP aimed to integrate mental health services into the existing public health framework via Primary Health Centres (PHCs) and Community Health Centres (CHCs). Its goal was to bring care closer to where people live, reduce dependence on tertiary hospitals, and ease the financial burden associated with travel, lost wages, and hospitalization. In short, it was designed to prevent the very crisis we see today—where families are pushed into catastrophic health expenditure just to access basic mental health support.

On paper, the program is promising. But in practice, it has been severely hampered by systemic issues:

• Inadequate infrastructure and a lack of trained professionals in PHCs and CHCs
• Delayed salaries and temporary contracts that discourage staff retention
• Poor training pathways and limited opportunities for professional growth
• Chronic under utilization of allocated funds due to weak implementation and oversight at the state level

As a result, many sanctioned positions remain vacant, and unspent budgets are often returned to the Central Government. This inefficiency sends the wrong signal, frequently leading to reduced allocations in future budgets, further weakening the programme’s impact.

These are not merely bureaucratic failures—they translate directly into financial hardship for families. Without local access to care, people are forced to travel long distances to cities for diagnosis and treatment, incurring costs for transportation, lodging, and private consultations. All of this often occurs while losing income due to missed workdays. For many, the burden is simply too great. Care is delayed or avoided, worsening the condition and making future treatment even more expensive.

A glaring example of India’s mental health resource gap is the shortage of trained professionals. India currently has only 0.75 psychiatrists per 100,000 people, far below the WHO’s recommended minimum of 3 per 100,000 (WHO, 2022; Indian Journal of Psychiatry, 2023). This significant gap underscores the urgency of strengthening community-based services like the DMHP.

Recent initiatives such as Tele MANAS, launched in October 2022, show promise. Offering free, 24/7 mental health support through a national helpline, it has handled over 1.8 million calls as of February 2025. While valuable, such measures must complement—not replace—on-ground systems like the DMHP.

To bridge the treatment gap, India must invest in strengthening the DMHP, improving workforce capacity, and ensuring better budget utilization. Without these reforms, the promise of accessible and affordable mental health care will remain out of reach for millions.

Why This Matters

If India is serious about reducing the economic toll of mental illness, strengthening the DMHP is essential. A robust, well-funded, and properly implemented DMHP would lower treatment costs, reduce the need for hospital-based care, and provide preventive services that help people earlier in their journey.

In essence, community-based care is the most cost-effective form of care. Fixing the DMHP is not just a policy priority; it is a right based need. Until mental healthcare is brought closer to where people live, the burden will remain unbearably heavy, both emotionally and economically.

When Community-Based Models Work

Amid all these challenges, there is hope and it lies in community-based care. A study by Ramesh, Thomas, and Devi (2023) looked at the financial impact of community-based rehabilitation (CBR) for mental illness in rural South India. The findings were remarkable.

Before transitioning to CBR, families spent an average of ₹15,074 annually on mental health treatment. After the switch, this dropped drastically to ₹492. Expenses like psychiatrist consultation fees and medication, once fully paid out-of-pocket, were eliminated through locally delivered services. For the 95 families in the study, the total annual savings amounted to ₹3.83 lakh.

These results show that when care is brought closer to communities both geographically and socially, access improves and costs decline. CBR programs also help reduce stigma by embedding care into everyday settings, making it more likely that people will seek and continue treatment. This is especially valuable in areas where travel to a city or major hospital is neither affordable nor feasible.

What Needs to Change Now?

India stands at a critical point. It has the legislation, pilot programs, and growing public interest in mental health. What’s missing is focused, systemic action. To move forward, the country must address three key priorities:

1. Insurance That Truly Covers Mental Health

Laws like the Mental Healthcare Act must be enforced more effectively. All insurance plans, public and private should be required to include mental health coverage that goes beyond hospitalization. Comprehensive policies should cover therapy sessions, follow-ups, outpatient care, and medication. Without such provisions, the gap between policy and reality will only widen.

2. Strengthen Community and Preventive Care

Rather than concentrating most resources in large institutions, the government should invest in preventive care and early intervention at the community level. This means equipping PHCs with trained mental health professionals, integrating screening and counseling into general health checkups, and ensuring a steady supply of essential psychiatric medicines.

The success of CBR programs proves that effective care doesn’t always require expensive infrastructure. With the right training, community health workers can deliver meaningful mental health support, improve outcomes, and drastically reduce costs.

3. Financial Protection for the Vulnerable

Many families simply cannot afford the cost of ongoing mental healthcare. Subsidies, cost-sharing programs, and targeted cash support can shield disadvantaged households from financial ruin. These mechanisms must be designed with sensitivity, ensuring that assistance reaches those most in need without complex bureaucratic hurdles.

Final Thoughts

Mental health is not a fringe issue, it is a public health priority that affects millions of Indians every day. And it’s not just a personal or emotional challenge, it’s a financial one too. When access to care depends on the size of one's bank account, the system is broken.

India has taken promising steps in recent years, but much remains to be done. By enforcing insurance reforms, investing in community services, and protecting low-income families from catastrophic health spending, the country can move toward a more equitable, inclusive mental health system.

Mental healthcare should not be a privilege for the few. It must become a basic right for all—regardless of geography, income, or social status. The numbers are alarming, but they also offer clarity. They tell us exactly where the gaps are and what needs fixing. Now, it’s up to policymakers, healthcare providers, and society to act—because no one should have to choose between mental well-being and financial survival.