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Analysis of Public Expenditure on Health Using State Level Data

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  • Bhat Ramesh
  • Jain Nishant

Abstract

Increasingly the governments are facing pressures to increase budgetary allocations to social sectors. Recently there has been suggestion to increase the government budget allocations to health sector and increase it to 3 per cent of GDP. Is this feasible goal and in what time-frame? Health being State subject in India and much depends on the ability of the State governments to allocate higher budgetary support to health sector. This inter alia depends on what are current levels of spending, what target spending as per cent of income the States assume to spend on health and given fundamental relationship between income levels and public expenditures, how fast expenditures can respond to rising income levels. We present analysis of public expenditures on health using state level public health expenditure data to provide preliminary analysis on these issues. The findings suggest that at state level governments have target of allocating only about 0.43 per cent of SGDP to health and medical care. This does not include the allocations received under central sponsored programmes such as family welfare. Given this level of spending at current levels and fiscal position of state governments the goal of spending 2 to 3 per cent of GDP on health looks very ambitious task. The analysis also suggests that elasticity of health expenditure when SGDP changes in only 0.68 which suggest that for every one percent increase in state per capita income the per capita public healthcare expenditure has increased by around 0.68 per cent.

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  • 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.
  • Handle: RePEc:iim:iimawp:wp01831
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    2. 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.
    3. Amruta Mohanty, 2023. "External Stimulus to Social Sector Expenditure in India: An Interstate Analysis," Journal of Studies in Dynamics and Change (JSDC), ISSN: 2348-7038, Voices of Inclusive Change and Expressions- (VOICE) Trust, Dehradun, Uttarakhand, vol. 10(2), pages 27-44, April-Jun.
    4. Shailender Kumar Hooda, 2016. "Determinants of Public Expenditure on Health in India: A Panel Data Analysis at Sub-National Level," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 14(2), pages 257-282, December.
    5. Basu, Deepankar & Das, Debarshi, 2015. "Service Sector Growth in India: A View from Households," UMASS Amherst Economics Working Papers 2015-10, University of Massachusetts Amherst, Department of Economics.
    6. S. M. Abdullah & Salina Siddiqua & Rumana Huque, 2017. "Is health care a necessary or luxury product for Asian countries? An answer using panel approach," Health Economics Review, Springer, vol. 7(1), pages 1-12, December.
    7. Mujaheed Shaikh & Afschin Gandjour, 2019. "Pharmaceutical expenditure and gross domestic product: Evidence of simultaneous effects using a two‐step instrumental variables strategy," Health Economics, John Wiley & Sons, Ltd., vol. 28(1), pages 101-122, January.
    8. P.K. Mishra (b), S.K. Mishra (b) and M.K. Sarangi (b), 2020. "Social Sector Development and Economic Growth in India, 1990-1991 to 2017-2018," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 45(4), pages 49-68, December.
    9. Bhat Ramesh & Saha Somen, 2004. "Union Budget 2004-05 and the Health Sector," IIMA Working Papers WP2004-07-07, Indian Institute of Management Ahmedabad, Research and Publication Department.
    10. 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.
    11. 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.

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