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Determinants of state level financing of health: Panel data evidence from Southern Indian states

Author

Listed:
  • Prasant Kumar Panda

    (Pondicherry University)

  • Aliva Dipali Panda

    (Pondicherry University)

Abstract

The paper empirically examines the important factors determining states’ expenditure on medical and public health and total health expenditure, verifies the importance of federal transfers and observes whether health is a luxury in India. To this end, a panel data set for four southern Indian states for the period 1993-94 to 2009-10 is used. Double log multiple panel regression equations have been specified for analysis. Feasible generalized least square estimator has been employed to estimate the coefficients with the option of first order panel specific auto-regressions. The findings suggest that the change in health spending of the southern Indian states are mainly determined by the states’ resource capacity, availability of resources in terms of central transfers and due to the pressure from demand side factor like higher infant mortality rate. The health is not luxury in Indian context, as the income elasticity of aggregate health expenditure is found to be 0.697. The paper calls for strengthening states’ resource capacity, and sanction of more specific purpose central grants for increasing state spending on health.

Suggested Citation

  • Prasant Kumar Panda & Aliva Dipali Panda, 2013. "Determinants of state level financing of health: Panel data evidence from Southern Indian states," The Empirical Econometrics and Quantitative Economics Letters, Faculty of Economics, Chiang Mai University, vol. 1(2), pages 41-52, June.
    • Handle: RePEc:chi:journl:v:2:y:2013:i:2:p:41-52
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    References listed on IDEAS

    as
    1. Tauhidur Rahman, 2008. "Determinants of public health expenditure: some evidence from Indian states," Applied Economics Letters, Taylor & Francis Journals, vol. 15(11), pages 853-857.
    2. Hitiris, Theo & Posnett, John, 1992. "The determinants and effects of health expenditure in developed countries," Journal of Health Economics, Elsevier, vol. 11(2), pages 173-181, August.
    3. Choudhury, Mita, 2006. "Public spending on health in low-income states and central transfers," Working Papers 06/01, National Institute of Public Finance and Policy.
    4. Gbesemete, Kwame P. & Gerdtham, Ulf-G., 1992. "Determinants of health care expenditure in Africa: A cross-sectional study," World Development, Elsevier, vol. 20(2), pages 303-308, February.
    5. Bhat Ramesh & Jain Nishant, 2004. "Analysis of Public Expenditure on Health Using State Level Data," IIMA Working Papers WP2004-06-08, Indian Institute of Management Ahmedabad, Research and Publication Department.
    6. Anindya Sen, 2005. "Is Health Care a Luxury? New Evidence from OECD Data," International Journal of Health Economics and Management, Springer, vol. 5(2), pages 147-164, June.
    7. Mita Choudhury, 2006. "NIPFP Policy Brief: Public Spending on Health in Low Income States and Central Transfers," Working Papers id:768, eSocialSciences.
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    Cited by:

    1. Priya Ranjan & Prasant Kumar Panda, 2022. "Pattern of Development Spending and Its Impact on Human Development Index and Gross State Domestic Product in Low-income States in India," Journal of Development Policy and Practice, , vol. 7(1), pages 71-95, January.

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    More about this item

    Keywords

    States’ health spending; Determinants of health expenditure; Federal transfers; FGLS; Panel Data Econometrics;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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