At just 1.8% of its GDP, India’s public spending on healthcare is among the lowest in the world (Economic Survey of India 2020-21, 2021) – well below the target of 2.5% of GDP in the National Health Policy (2017). These figures hide significant variation between State expenditures at the sub-national levels. While Rajasthan planned to spend 7% of its total expenditure budget on healthcare in 2020-21, Karnataka only allocated 4% of its funds for health in the same period (Kapur et al., 2020).
Several factors may influence a State’s budgetary decisions on healthcare. The per capita income of States varies between Rs. 46,664 for Bihar to Rs. 4,66,585 for Goa. The wealthier States have a greater pool of resources with which to fund healthcare. Further, States receive fiscal transfers from the Union, and allocations for healthcare may depend on whether the Union’s grants are general-purpose or tied to a specific scheme such as National Health Mission and Ayushman Bharat (Khullar et al., 2019). Several studies have found that when States received an increase in untied funds after the Fourteenth Finance Commission award (2015), States did not necessarily allocate the additional resources to healthcare (Alok Kumar et al., 2019) (Khullar et al., 2019) (Kotia & Roy Chowdhury, 2018) (Kapur et al., 2016).
In this research brief, we explore the differences in healthcare expenditure between the high-performing and lower-performing States, as defined by Disability Adjusted Life Years. Our research shows that there is little variation in State expenditure on healthcare as a proportion of total expenditure. States spend between 3.7% and 5.5% of their total expenditure budgets on healthcare – well below the target of 8% of spending in the National Health Policy. These figures do not differ significantly between the high-performing and low-performing States. Nor has the growth rate varied significantly after the States’ share of untied Union funds increased after the Fourteenth Finance Commission award.
Additionally, we note that high-performing States spend a far greater rupee amount per capita than low-performing States. Even so, higher-performing States spend a far lower share of GSDP on healthcare compared to the low performing States. This indicates a wide disparity in fiscal resources between the high-performing and low performing States and suggests that low-performing States may not have the resources to increase spending on healthcare. Based on this, we argue that there is a need to explore the factors that influence State expenditure, including the availability of fiscal resources, and to address these factors urgently.
To know more, please read our research brief on “Making Healthcare Budgets Count: A Study of State Expenditure on Healthcare” here.
Cite this item
Ashraf, H., & Kumar, A. (2021). Makings Healthcare Budgets Count: A Study of State Expenditure on Healthcare. Dvara Research.
Ashraf, Hasna, and Anupama Kumar. “Making Healthcare Budgets Count: A Study of State Expenditure on Healthcare.” Dvara Research (2021).
Ashraf, Hasna, and Anupama Kumar. 2021. “Making Healthcare Budgets Count: A Study of State Expenditure on Healthcare.” Dvara Research.