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Fiscal Policy Determinants of Health Spending in India: State Versus Center

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  • DEEPAK KUMAR BEHERA

    (Department of Economics and Finance, The Business School, RMIT International University, Ho Chi Minh City, Viet Nam)

  • DIL BAHADUR RAHUT

    (Asian Development Bank Institute, Tokyo, Japan)

  • UMAKANT DASH

    (Institute of Rural Management Anand, Gujarat, India)

Abstract

This study uses data from 1986 to 2021 and the auto-regressive distributed lag model to explore India’s fiscal policy determinants of government health spending. The results find two structural breaks in time: (i) 2002 for state government health spending (SGHS) and (ii) 2014 for central government health spending. The results also show that central revenue transfers to states have a positive and statistically significant effect on SGHS in the long run. The results imply that a 1% rise in central revenue transfers to states leads to a 0.399% increase in SGHS. Further, state government public debt exhibits a negative and statistically significant relationship with SGHS, implying that a 1% rise in public debt leads to a 0.119% fall in SGHS in the long run. Fiscal management (i.e., revenue mobilization and debt sustainability) is essential to prepare a long-term strategy for health-care financing.

Suggested Citation

  • Deepak Kumar Behera & Dil Bahadur Rahut & Umakant Dash, 2024. "Fiscal Policy Determinants of Health Spending in India: State Versus Center," Asian Development Review (ADR), World Scientific Publishing Co. Pte. Ltd., vol. 41(02), pages 325-347, September.
    • Handle: RePEc:wsi:adrxxx:v:41:y:2024:i:02:n:s0116110524500100
    DOI: 10.1142/S0116110524500100
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    More about this item

    Keywords

    auto-regressive distributed lag model; fiscal policy; government debt; government health spending; government revenue;
    All these keywords.

    JEL classification:

    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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