How is the Public Expenditure Relevant for Health Outcomes across Indian States?

Deb, Surajit (2016). 'How is the Public Expenditure Relevant for Health Outcomes across Indian States?' Paper presented at the annual conference of the HDCA, Tokyo 2016.

1. Introduction and Objective: At the turn of the century, viz., 2002, the health outcomes and performance indicators namely infant mortality rate or maternal mortality ratio in India lagged behind the averages of low and middle income countries. Despite some progress made in the outcome indicators such as infant mortality rate or life expectancy, it appears that India may fall short of the 2015 targets set by the Millennium Development Goals (MDG). According to the World Health Statistics by the WHO [2005], India has met only 4 out of 10 health targets under the MDG, and has made next to no progress on another 4 indicators. Another characteristic feature of the health outcomes in India is the inequalities across states. Thus, while the adoption of the National Health Mission focused on lagging states and emphasized on the health of women and children, the MDG targets on infant and child mortality remains largely unattained in many states of India.
It is generally argued that the government’s endeavor towards social policies can be evaluated by the share of its budgetary expenditures on health, education and social welfare services. A recent study has pointed out that India’s social spending has not been enough in comparison to the developing Asia, which resulted in low achievements in the areas of nutrition and health (UN 2015). According to the latest Economic Survey, the expenditure on health as a percentage of the GDP remained at 1.4% (BE) in 2013-14 (GOI 2014). The failure to sustain the minimum levels of public health expenditure is often considered the primary constraint in attaining the desired health outcomes in the country. Further, the level of variations in the health sector allocation that is evident in the disaggregated state level data raise the central question whether the economic and health inequalities are independent or mutually reinforcing components in a country like India? The issue can be structured as a testable hypothesis to examine whether economic prosperity due to rising per capita income alone can ensure progresses in health or there is a need for specific policy framework alongside increased social sector spending. Therefore, the main objective of this paper is set to explore the impacts of economic growth as well as budgetary expenditures on the crucial development dimension of health in India.
2. Methodology and Plan of Study: Our analysis proceeds in two steps; we first provide a comparison of achievements in health dimension across states of India by constructing a composite index using appropriate dimensions and indicators. The aggregate index of health dimension would be constructed for 29 states and union territories by employing the two stage principal component method to determine the set of weights for deriving the composite index from indicators.[1]Second, we use the cross-sectional data covering 29 observations to examine the impacts of per capita economic growth and the respective budgetary allocation on the health dimension in India. We perform regression analysis involving the disaggregated states data on the relationship among economic growth, budgetary allocation and performances in the health sector as follows:
Development Index Health=f (PCSDP, PCGEH)
PCSDP = per capita state domestic product
PCGEH = per capita government expenditure on health
3. Data Source:
The description of the indicators that are to be used in the construction ofa composite index in health along with the account of their data base is provided in the following table:
Table: Dimensions and Indicators of Health Index.
Data Base
Dimension: Mortality
Life Expectancy
Sample Registration Scheme,
Abridged Life Tables, 2010
Infant Mortality Rate
Sample Registration Scheme, 2014
Maternal Mortality Ratio
Sample Registration Scheme, 2014
Dimension: Nutrition
Percentage of Undernourished Children
National Family Health Survey, 2005/06
Nutritional Status of Women
National Family Health Survey, 2005/06
Nutritional Status of Men
National Family Health Survey, 2005/06
Dimension: Sanitation
Percentage of households having access to Drinking Water
Census Housing Tables, Census 2011
Percentage of households having access to Toilet Facility
Census Housing Tables, Census 2011
Dimension: Health System and Infrastructure
Institutional Delivery
National Family Health Survey, 2005/06
Number of Primary, Community and Sub Health Centers
National Family Health Survey, 2005/06
Besides these, the data on public expenditures in health are gathered from Reserve Bank of India [2015]: ‘State Finances: A Study of Budgets’. The information on per capita state domestic product would be accessed from Central Statistical Organization’s ‘Estimates of State Domestic Product in India’.
4. Policy Implications:
The previous research has identified large disparities across Indian states in various health outcomes (Joe et al 2008, Purohit 2012, UN 2015). The Indian HDI, which looks into the health dimension by focusing on the ‘life expectancy at birth’ indicator alone, also suggests growing health inequalities among states of India (GOI 2011). This paper would develop a comprehensive Health Inequality Index for Indian states in the form of a composite index that considers four crucial dimensions, viz., mortality, nutrition, sanitation and health infrastructure, and takes into account ten indicators. In the present day, a pertinent issue that is being debated in both the academic and policy-making circles concerns the significance of social policies in the country. While one opinion maintains that the government should prune the social sector schemes to contain budgetary deficits, others argue that social protection should be at the center of public policy making. The results of this study could provide some crucial insights on health sector policy-making in India.
[1]The 29 states and union territories covered for this part of our analysis are: Andhra Pradesh (undivided),Arunachal Pradesh, Assam, Bihar, Chhattisgarh, Delhi, Goa, Gujarat, Haryana, Himachal Pradesh, Jammu & Kashmir, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Manipur, Meghalaya, Mizoram, Nagaland, Odisha, Punjab, Rajasthan, Sikkim, Tamil Nadu, Tripura, Uttar Pradesh, Uttarakhand and West Bengal.

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