Research Project

Health Expenditure Across States

Research Area : Health Services and Financing

Analysis of time series data (1951 to the latest year, for all states and the central government) on the state's role in health care services was undertaken without any external financial support in 1994-5 in order to provide the basic framework to this programme of CEHAT. This paper argues that nowhere in the world has an effective contribution to health care been possible without the active participation of the State. In the advanced capitalist countries, the role of the State has been critical in ensuring universal availability of health care. In India, however, public health expenditure has been grossly inadequate right from the 1940s, when the Bhore Committee report stated that per capita private expenditure on health was RS. 2.50 compared to a state per capita health expenditure of just RS. 0.36. In the 1950s and '60s private health expenditure was 83 and 88 per cent of total health expenditure. Recent studies show that this is a continuing trend. Some of the important findings of this study are as follows:

  • The investment by the public sector for health has been inadequate, so much so that the state has never committed more than 3.5% of its resources to the health sector. Added to that is the fact that from 1970s, there has been a steady decline in public sector investment, which reached to its lowest level in 1994-5, being only 2.6% of total government expenditure.
  • The health care expenditure has not kept pace with increase in total government expenditure.
  • The public health expenditure's share in national income peaked at 1.3% of per capita GNP in mid-1980s, but since then has declined to 0.95% and under the structural adjustment there has been further compression. The central government sponsored health programmes are the most severely affected. The share of the central grants for public health declined from 27.92% in 1984-5 to 17.17% in 1992-3, and that for the disease control programme from 41.47% in 1984-5 to 18.5% in 1992-93.
  • The rural-urban gap is very wide in terms of investment, infrastructure development and availability of health care.
  • The expenditures by states account for around 90% of all public health expenditures.
  • Usually the better-developed states like Goa, Haryana, Karnataka, Maharashtra, Gujarat, Punjab have higher per capita expenditures as compared to the states of Bihar, Rajasthan, Orissa, Madhya Pradesh. The exception being Kerala which despite being economically under-developed has a higher expenditure on health.
  • In the analysis, the state financing and infrastructure data were supplemented by the data gathered from various national and small sample studies. They show that there is an overwhelming domination of the private sector in health care, brought about by the gross underdevelopment of the public sector and by the complete lack of regulation and planning for the private sector.

Projected Supported by: The Research Project on Strategies and Financing for Human Development
Team: Ravi Duggal,Sunil Nandraj and Asha Vadair

Project Publications