Jairam Ramesh, known as a maverick with often outspoken views, stressed that 70 percent of spending on health was out of people's own pockets, making it the single most important reason for indebtedness in rural areas.
"We all know that the health system in India has collapsed," he told a forum in New Delhi.
"India is a unique country in the world where 70 percent of expenditure is private expenditure at a time when most other countries are having a debate on how to increase public investment in health," he added.
"In many poor areas of India, the public health system simply does not exist."
Prime Minister Manmohan Singh pledged earlier this month that health spending would triple in a five-year plan adopted by the government.
Spending in 2010 was 4.0 percent of gross domestic product, according to the World Health Organization -- less than many African countries or Afghanistan and a fraction of developed nations, which spend around 10 percent.
Indians of all backgrounds and economic means generally choose to absorb the costs of a trip to one of India's booming private hospitals instead of their public equivalents, which are often under-staffed and poorly equipped.
Ramesh said the other important factor pushing people into poverty in India, where 40 percent of the population live on less than $1.5 a day, was degradation of the environment.
"The last 25-30 years, with accelerated economic growth and the pressure that economic growth has brought to bear on our natural resources, it has created this new animal of ecological poverty that we have to now address," he said.
He stressed the poor had "a disproportionate dependence" on forests, rivers and farm land, which are being steadily degraded under the pressure of the country's rising 1.2 billion population and economic development.
