Academic journal article Review of Management

Effects of State Level Government Spending in Health Sector: Some Econometric Evidences

Academic journal article Review of Management

Effects of State Level Government Spending in Health Sector: Some Econometric Evidences

Article excerpt

Introduction

In a developing country like India, public sector plays an important role in ensuring health care to all sections of society. However, Indian health care system can be characterized by low public spending on health and exorbitant out of pocket expenditure by households. Current scenario of health expenditure in India is worrisome. India's rank is 139 among 190 countries in terms of per capita expenditure on health ($267 PPP in 2014, WHO 2015). It has 157th position according to per capita government spending on health which is just about $60 PPP in 2012 while the US spent $4,153 (World Health Statistics 2015,). India's per capita government spending is one of the lowest in the World. It is less than one fifth of China and about 15 per cent of Thailand (WHO 2014). In India, the public sector accounts for a mere 30 percent of the total healthcare expenditure in 2014. India's public spending has increased from 0.22 percent of GDP in 1950-51 to 1.05 percent during the mid1980s and 1.3 percent of the GDP in 2015-2016. The per capita government spending is significantly lower than the other developing nations whereas, out-of-pocket expenditure by household is 62.4 percent of the total healthcare expenditure (World Development Indicator as on 14.10. 2016, WHO 2016). This financial burden of health care has significant 'impoverishing' effects on households in a developing country like India.

Health is state subject in India and therefore analysis of public health expenditures by States assumes greater significance. When the 14th finance commission recommendations on greater transfers to states were accepted by the Union government-which decided to cut its own social sector spending and instead transfer untied funds to states-there was widespread skepticism over how states would utilize this windfall, and whether they would fritter away the extra resources. The budgets allocations of each State include the allocation to health sector programmes as well as the support which State governments receive from central government through central sponsored programmes and various national programmes. The last few budgets (including the latest budgets for major states) suggest that state governments seem to have behaved responsibly when it comes to social sector spending, raising their expenditure on education and health even as central allocations to these sectors have declined.

However, there are significant inter-state variations across the country, with developed states spending more per capita on these sectors compared to less developed ones, partly because they have greater resources and fiscal space to do so. This has implications on providing Universal Health Coverage, which aims at 'ensuring equitable access for all Indians throughout the country to provide affordable, accountable and appropriate health services of assured quality with the government being the guarantor and enabler' (National Health Portal, GoI). Even in creating physical infrastructure, it seems there is huge inter-state discrepancy. Due to differences in capacity to allocate resources to the health sector there are differences in the availability of health services, which can be seen in Fig 1.We have shown the health infrastructure created by different states in 2015. Data reveals that Followed by Kerala, Rajasthan has performed fairly well in availability of health services. Here health infrastructure includes the total number of sub centres, primary health centre and community health centre.

Therefore, it is essential to study the differences in health services among the states which would assist to reduce the differences and make the health sector equitable in the country. Comprehensive and consistent evidence on financial aspect of a health care system is a prerequisite for assessing the situation and to bring about necessary reforms. Periodic assessment of standard indicators of health expenditure and finance helps in long term planning. …

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