CHAPTER - I

INTRODUCTION

1.1 Statement of the problem

Health is both an input and an outcome in the social and economic development of a
country (Musgrove, 2004). It is an important component that effects not only the
people’s well being but also governs a nation’s development. In recent times, the pursuit
of development has undergone substantial changes. Viewed from a mere growth in the
income levels, the emphasis has now focussed around human development which is a
means and end in itself that enables people to mend their own lives. A major challenge
that concerns most of the developing world today is to usher in a fundamental change in
their social and economic structures leading to improved development indicators in
terms of increased life expectancies, raising the literacy levels, improved gender
relations and effecting changes in their demographic structure. Bringing in these
structural changes largely requires the intervention from the government which in turn
can pave way for people to explore various economic opportunities that will be beneficial
to raise their living standards. Given the prevailing low capabilities and differential
economic conditions among the majority of population in these countries, government
action becomes crucial in the provisioning of the basic elements of human development
– namely education and health.

Governments in various countries play an important role in the promotion of health

status of the people by way of public provision of health care services as well as through
their development policies. Direct government funding has been an important source of
finance for health care services in most parts of the world. However, there has been a
considerable change in the recent thinking on the role of governments, caused by the
global changes in the economic policies. These are introduced by many countries in
order to bring about macroeconomic adjustments and enhance economic growth. In the
process, health budgets of many countries have been adversely affected. Case studies
by Cornia et al (1988) show that there has been a cut in government expenditure on

1
health in many countries like Brazil, Ghana, Jamaica, Peru, Philippines and Sri Lanka
when the adjustment took place.

Given the strong correlation between health and development, any reduction in
government expenditure on health would have a serious impact on the health capital
stock as well as the health status of the population (Gertler, 1990). Reduction in
government expenditure on health manifested into deterioration in health conditions in
both health capital stock as well as health status in the countries mentioned above
during their adjustment phase (Cornia et al, 1988)

In most developing countries, the states 1 have assumed a crucial role in their social and
economic development. Over the years, their functions have increased and subsequently
the demand for the basic services also intensified and their provision necessitated huge
financial resources. Added to this, in due course of time, most of the governments in the
developing world plunged in a deep financial crisis which further hampered the
provisioning of essential services including health care services due to lower levels of
resources to spend. The worsening fiscal situation in most of these countries compelled
them to undergo major changes in their economic policies in the form of stabilisation
measures and the Structural Adjustment Program (SAP) to tackle their burgeoning
deficits and to restore macroeconomic balance. Subsequently, the role and functions of
the state also underwent a transformation and in the process were curtailed to a
‘minimal’ state intervention thereby emphasising the market forces to act predominantly
in the provision of all services. Nevertheless, the states have a legitimate responsibility
and can intervene in areas where “markets undersupply a range of collective goods” like
ensuring clean air, basic literacy, public health, cheap transport and other services that
promote people’s well-being (World Bank, 1997a).

India has also become a party to the adjustment process with the introduction of
economic reforms in 1991 comprising of stabilisation and structural adjustment
measures. Studies have observed that the fiscal deficit reduction process has had an
adverse impact on the health care spending by the government in the initial years

1
The term ‘state’ is used to represent government and these words are used interchangeably throughout
the text

2
(Tulsidhar, 1993; Prabhu and Selvaraju, 2001). Although, there has been an increase in
the health care expenditure in the subsequent years, it is mainly in nominal terms; the
real increase has been marginal (Gumber, 2001). There is an added cause for worry on
account of the fact that, the deficit reduction process has resulted in a reduction in
central grants in the states especially in the areas of public health and disease control
programs (Duggal et al, 1995b; Purohit, undated). Studies also reveal (Baru, 1999;
Shiva, 2002) that a cut in the health budgets towards disease control programmes and
the resultant decline in public health standards led to the resurgence of diseases and
epidemics. Their appearance after having been eradicated, as evident from the malaria
epidemic in Rajasthan and the plague epidemic in Surat in 1994 has caused several
deaths on account of the negligence of the States towards public health and lack of
adequate health care services at the right time.

In addition, there are wide disparities in the per capita health expenditure as well as
health development among the Indian States which are mainly responsible for the
development of the health sector. In the context of the reduction in central grants, it is
observed that the central government spending is reinforcing rather than compensating
for the inequalities in state government spending (Deolalikar and Prem Vashishtha,
1996). Another problem which is of serious concern for the health sector arises from the
recent developments where in the secondary health care services comprising of public
hospitals and health centres have received a setback on account of the reduced supply
of inputs (Kutty, 2001). This would have its implications on the poor as they rely more
on these services for preventive and curative care.

It is in this context, that a study of the impact of fiscal measures on the health sector in
India is imperative, as a vast majority of the population; especially the poor are
dependent on public health services. A cut in public expenditure on health is likely to
affect the supply and quality of these services and it would adversely affect the poor.
While the country already has a low profile (128th rank) on the Human Development
Index (UNDP, 2007); cuts in government expenditure could be a cause for serious
concern for the health status of the people and ultimately on development.

3
It is against this background that the present study focuses on government financing of
health care during the fiscal reform phase in India. The focus of this study is to examine
the behaviour of health care financing by the governments, both the Centre as well as
major states in India, during the reform phase and analyse its implications on the health
outcomes.

1.2 Health care financing by the government

Health care financing refers to the mobilisation of funds for health care, allocation of
funds to regions and population groups for specific types of health care and
mechanisms to pay for health care (World Bank, 1997). Governments play an important
role in achieving the distributive benefits for the attainment of an improved health
status. Financing of health care by the government becomes necessary as not
everybody, especially the poor and vulnerable sections of the society can afford to pay
for health services. Therefore, it is the responsibility of the government to provide the
basic essential services particularly to these sections of the society either through its tax
revenues or other schemes.

The rationale for government financing of health care (World Bank, 1993) are:

• To achieve universal access to health care so that poor are provided with the
essential health care services which the non-poor can afford to buy out of
pocket. This could reduce poverty and improve the productivity and well- being
of the poor.

• Some of the health services possess the characteristics of merit goods which
possess large externalities, the benefits of which cannot be measured and the
private market would not be able to provide in a cost-effective manner to larger
sections of the population.

• To tackle market failures in health care and health insurance.

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Thus, by financing and ensuring an efficient supply of health services that reach out to
the large sections of the population, there is every possibility for the improvement in
health status, productivity and also an enhancement of both human and economic
development.

Table 1.1: Cross-country comparison of health expenditure, 2001

(as per cent of GDP)

Countries Government Private
Germany 8.1 2.7
USA 6.2 7.7
Brazil 3.2 4.4
Zambia 3.0 2.7
Mexico 2.7 3.4
China 2.0 3.4
Srilanka 1.8 1.9
Bangladesh 1.6 2.1
Ethiopia 1.4 2.0
India 0.9 4.2

Source: WHO, World Health Report, 2003

Financing of health care by the government varies widely across nations. These
variations in the pattern of financing can be attributed to differences in the resources
available to governments, the functioning of markets, people’s values and the
responsiveness of the political system to public preference (Schieber and Maeda, 1997).
A comparison between the developed and developing countries reveals that, of the total
real expenditure spent on health, the share of government expenditure directed towards
health care covers almost half of the total expenditure in the developed countries, where
as in the developing countries the share of government expenditure is only 20 per cent.
The rest of it is financed by private sources (World Bank, 1997).

In the low income countries, the government’s health expenditures are mostly financed
from budgetary sources which are subject to narrow tax bases and weak collection
capacities. The per capita health expenditure in these countries is less than $80, with
health sector expenditures accounting not more than 4.5 percent of the GDP in these
countries (World Bank, 2001). India is estimated to have spent around 5.1 per cent of

5
its GDP on health (WHO, 2004) Out of this, the public expenditure incurred on health
was 0.9 per cent of GDP in 2001 (GOI, 2005) which tends to be the least when
compared with its other counterparts like Bangladesh, China and Sri Lanka where in
their shares stood at 1.6 per cent, 2.0 per cent, 1.8 per cent respectively (Table 1.1).

Middle income countries (Latin America and the Caribbean, Middle East and North Africa)
have better budgetary resources and social security schemes both for civil servants as
well as formal sector employees when compared with the low-income countries. Most of
these countries finance their health expenditures through general revenues although a
few try to expand their coverage through social insurance (Schieber and Maeda, 1997).
The per capita health expenditure in these countries ranges between $80-$400, with
health sector expenditure accounting for 5 per cent of their GDP (World Bank,
2001).These countries have been able to contribute fairly higher expenditures on health
care on account of their developed financial sectors and capital markets, increased
employment in the formal sector and other social changes (Schieber and Maeda, 1997).
Despite all these developments, these countries fall short of universal coverage.

The per capita health expenditure in high income countries exceeds $400, with health
sector expenditure accounting for about 9.7 percent of GDP (World Bank, 2001).With
the exception of USA, all industrialised countries have achieved universal coverage
largely through government spending and private insurance supplementing the major
services covered by the government. The newly industrialised countries like Korea are
also close towards attaining universal coverage of health services (World Bank, 1997).

1.3 Health care and policy in India

In India, though health is a concurrent subject, Article 47 of the Indian Constitution

emphasise the provision of health care - both preventive and curative services mainly to
be a responsibility of the state governments. Central government chiefly provides for
disease control programmes, family welfare services and medical education and
research. The other components in the health sector are jointly financed by the central
and state governments, with a larger share from the states.

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India has long recognised the role of health as an important factor for its social and
economic development as evident from various committees set up from time to time to
recommend policy changes. The landmark Bhore Committee of 1943 made numerous
recommendations that would enable a fair level of health development in the country.
The Committee set out universal health care provision as the goal of the health system.
Important recommendations of the Committee included a minimum of 15 percent of
government expenditure to be spent on health care services; closer proximity to health
services; distribution of health care personnel and hospital services on a wider basis in
accordance with the population and special emphasis on preventive health care to
control communicable diseases.

Since then, Government of India has appointed a number of committees to make

important policy recommendations in order to develop the heath care system in the
country. These include the Mudaliar Committee in 1961, Jain Committee in 1966, Kartar
Singh Committee in 1974, Srivastava Committee in 1975 and the ICMR-ICSSR joint
panel report in 1981.

It is observed that in the first two decades since Independence, significant progress was
made in the public health system through various public health programmes such as the
National Malaria Eradication Programme (NMEP), family welfare programmes,
establishment of primary health centres and setting up of various institutions like the
National Tuberculosis Institute and National Institute of Health Administration and
Education. In the subsequent period, the public health system witnessed a decline in the
quality of health services on account of misallocation of resources wherein, a major
portion of the health budget went to the family welfare programs, neglecting other
allocations for preventive and curative care (Misra, Rachel and Sujatha, 2003). Another
reason for this has been the donor-driven agenda wherein priority was given to specific
programmes which led to the inadequate emphasis of the government to other
components of public health care provision. Due to ‘under-provision’ of public health
services along with poor functioning and inaccessibility of the public health centres, the

7
private sector emerged as an important player in provisioning health care services which
has had adverse effects due to the higher costs of care (Banerji, 2001).

The National Health Policy of 1983 reinforced the importance of health development as
an integral part of overall human resource development. It sought to establish a
coordinated approach among all health related programs, like water supply,
environmental sanitation and hygiene, nutrition, housing and education. The policy
highlighted the need for restructuring the health services focusing on preventive,
promotive and rehabilitative aspects of health care and brought out the need for
establishing comprehensive services to reach the populations in remote areas. The need
for primary health care was realised by the policy in order to serve the needs and
priorities of the community at an affordable cost. It emphasized a fuller utilization of
untapped resources by encouraging the establishment of practice by private medical
professionals, increased investment by Non Governmental Organisations (NGOs) in
establishing curative centres and by offering financial and technical support to voluntary
agencies active in the health field (GOI, 1985).

Not withstanding the policy interventions, the health status in India remained
unsatisfactory. The National Health Policy of 2002 reviewed the existing health care
mechanism in the country and observed the health situation to be substandard. Infant
Mortality Rate was 70 per 1000 live births, the Maternal Mortality Rate was 408 per
1,00,000 live births, the Life Expectancy at Birth was 62.5 and the morbidity rate was
very high (GOI, 2000). The government health spending in the country also declined
from 1.3 per cent in 1991 to 0.9 per cent in 1999 of GDP. Given the above precarious
condition of healthcare and inadequate government funding, any further deceleration of
health care financing by the government would result in a further setback to the health
scenario in the country.

In order to tackle these issues, the new policy set out the objective of achieving an
acceptable standard of good health among the population. The focus of the National
Health Policy 2002 was to ensure equity in health services. Consistent with this goal, the
policy emphasizes expanding and improving the primary health facilities along with

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provisioning of essential drugs through central funding. The policy recommended an
increase in central government spending on health to constitute 2 per cent to the GDP
by 2010, to meet the minimum requirements of the vulnerable groups thereby,
facilitating rational and equitable resource allocation. The policy also emphasises the
necessity of the state governments to increase their budgets towards health services in
two phases - 7 per cent of their total expenditure by 2005 and by 8 percent of their total
expenditure by 2010, there by increasing the total public health investment in the
country to 25 per cent of the total health expenditure as against the present spending of
15 per cent. The policy calls for a greater participation of the state governments and the
NGOs in the provision of public health services in accordance with the central
government. The policy also calls for reforming the bureaucracy and giving more
authority to local bodies. It emphasises the practical need to levy reasonable user
charges for certain secondary and tertiary health care services (GOI, 2002).

In pursuit of promoting health care in the rural areas, the Government of India launched
the National Rural Health Mission (NRHM) in April 2005 to provide effective health
services to rural population throughout the country. The Mission set up for an eight year
period from 2005 to 2012, was introduced in eighteen states that had unsatisfactory
health outcomes and weak infrastructure by creating health workers known as
Accredited Social Health Activist (ASHA) who will act as a link between the health care
services and villagers. The other initiatives are more or less similar to the previous
policies wherein it emphasises for an increase in the health spending by the government
to 2-3 per cent of the GDP, provision of effective Maternal and Child Health services,
prevention of communicable and non-communicable diseases, mainstreaming the
indigenous system, greater involvement and capacity enhancement of Panchayati Raj
Institutions (PRIs), establishing Sub-centres and promoting non-profit sector particularly
in under served areas besides developing capacities for preventive health care at all
levels for promoting healthy life styles.

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1.4 Issues pertaining to the study

Based on the present scenario of health care situation, the health care policy and the
changes effected from time to time, the following researchable issues have been
identified for the present study.

• Shortage of adequate funds for health care financing has been a persistent problem
encountered in India. The problem is likely to get aggravated further on account of
the economic reforms that have been attempting fiscal deficit reduction. It is
important to examine the effects of fiscal reforms on health care financing across
various states.

• Indian case appears to be peculiar in the sense that while total health care
expenditure (both public and private) in the country is observed to be higher than all
its counterparts, the government spending is observed to be the lowest as observed
from Table 1.1. The performance of the country in terms of outcomes has been
unsatisfactory. Misallocation of resources and inefficient spending within and across
sectors are often cited as the reasons for such poor outcomes (Garg, 1998). The
fiscal reforms are likely to impact the resource allocation in the health sector. In the
light of these developments, there is a greater need to efficiently allocate the
resources as recognised by the National Health Policy (2002). Hence, it would be
appropriate to examine the changes that are taking place in the composition of
expenditure and see whether they reflect the health needs of the people.

• Geographical mal distribution of resources in the health sector has been a persistent
problem, which the country has witnessed for more than five decades. Inequalities
across states have widened based on the growth in real income as well as
concentration of resources in a particular region. Studies have shown that state-level
variations in expenditure on health over the years as a proportion to total
government expenditure reveal a declining trend in most of the states especially in
the late eighties. It has been observed that Kerala in spite of being at a lower level
on the economic development scale has a higher spending on health when

10
 compared with States like Bihar, Orissa, Uttar Pradesh, Madhya Pradesh and
Rajasthan (Duggal et al, 1995a). Government of India has been trying to mitigate
these disparities in social services by way of central government transfers to the
backward states. With the onset of the fiscal reforms, there has been a decline in
the central government transfers to states which is likely to augment the inequalities
in state government spending. Against this background, it would be important to
analyse the inter-state disparities in the health services especially during the phase.

• The existing health infrastructure in India is highly inadequate and has suffered from
highly centralized decision making, wide fluctuations in budgetary allocations and
poor incentives for public health personnel (doctors and health care workers) (World
Bank, 1993). There is every possibility for the health infrastructure to be adversely
affected in view of the cuts in public spending and therefore it would be appropriate
to examine the state of health infrastructure in the country during the reforms.

• Data over the years reveals that the performance of the country in terms of its
health indicators has been very poor when compared with the rest of the developing
world despite policy interventions made from time to time to improve the health
status in the country. The stagnation in the real expenditure on the health sector on
account of the reforms is expected to have a telling impact on the health status.
Under such a circumstance, it will be important to analyse the outcome of health
investment.

• There exist both the public and the private market in the provision of health care
services. In the context of the changing role of state, it is essential for the respective
state governments to decide which type of health care services should be provided
by the government and which ones could be left to the market forces without
adversely affecting the overall welfare. Keeping this in view, it is important to
attempt a careful analysis to determine the type of services that should be
essentially provided by the government and more importantly how governments
should intervene for an efficient provision of these services in the changed scenario.

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1.5 Theoretical framework

The study draws its theoretical underpinnings from three branches of Economics,
namely:

(i) Public Economics

(ii) Institutional Economics
(iii) Development Economics

Public Economics

Public Economics provides the theoretical base for government intervention in the
provision of health care services. Governments have assumed considerable importance
in the provision of certain goods and services of which health care provision and delivery
assumes significant importance. It is argued that certain health care services possess
the characteristics of merit goods which generate large externalities. They are also non-
rival and non-excludable in nature. Non-rivalry is said to prevail when the consumption
of a certain good by one person does not reduce its quantity availability to others
(Samuelson, 1955) whereas non-excludability refers to a situation where a person
cannot be excluded from getting the benefits that arise out of the consumption of goods
by another (Musgrave, 1976).

An equally important aspect that goes hand in hand with the need for government
financing of health care is with regard to the categories of health care that the
government should finance. Public Economics also lays out the categories of health care
that need to be supported by the government. It is argued that the non-patient related
preventive health care should be provided by the government free of cost on account of
the externality component and non-excludability characteristics of these services
(Gertler, 1990). Uncertainty about occurrence of ill health and also health as a basic

12
human right requires government intervention in provision of health care services free of
cost or at subsidised prices (Gertler, 1990).

Barnum and Kutzin (1993) further extend the rationale for financing of health care
services by the governments on the grounds of efficiency, equity and revenue collection.
Apart from the merit goods argument which stresses the need for public provision, the
existence of two more sources of market failures namely inadequate consumer
information and incomplete market for health care services calls for the need for
government intervention in the provision of health care goods and services in an
efficient manner. Equity considerations also emerge from market failures and hence,
require government intervention to provide greater accessibility and use of health
facilities across different groups of the population on a wider basis and also the burden
of payment to be distributed progressively across different income groups. If the
collected revenues are to be efficiently and equitably distributed, it is the central
government which has to perform such tasks in order to achieve a universal access to
health care.

The increased state intervention towards social welfare assumed importance with the
origin of the concept of welfare state. This in turn resulted in an increase in public
expenditures and in the process paved way for the evolution of the theories of public
expenditure. The theories of public expenditure can be classified into three - normative,
positive and applied theory of public expenditure. They deal with issues like the
appropriate level of expenditure (normative theory), the behaviour and composition of
the prevailing public expenditures (positive theory) and the operational aspects of public
expenditure (applied theory).

The positive theory of public expenditure deals with the behavioural pattern of public
expenditure in the past and during the present conditions. It takes into account
important aspects like the determinants of the volume and composition of public
expenditures, what goods and services are financed through the public system and how
the mix of public expenditure changes over time. It also explains the observed pattern
and the level of government expenditure and the changes in these expenditures over

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time. Since the study aims to examine the growth and behaviour of health sector
expenditure of the states, its volume and changing composition in the pre-reform and
during the reforms, the implications of the deficit reduction measures on health sector
spending in the states and also the allocative efficiency of the health sector expenditure,
it confines to the positive theoretical framework of public expenditure.

Institutional Economics

The state has been playing a major role in the provision of health care for a long time.
With the onset of economic reforms, the definition of the role of state has undergone a
change. The neo-classical economists argue that the state should play a minimal role,
limited to the provision of pure public goods that have spill over benefits and the
delivery of other services should be unbundled to the market forces with the state being
a mere overseer and financier (World Bank, 1997).

Under the changing scenario, with the role of the state being redefined, the core issues
revolve around the aspects such as how government should intervene in the health care
market for an efficient delivery of the health services. Institutional Economics provides
guidance on the choice of instruments to reduce market failures and the framework for
such interventions that can be made on the basis of measurability 2 and contestability 3 of
these goods and services (Girishankar, 1999).

It is argued that the government through instruments such as regulation, contracting,

subsidies, financing and production can set out to the private sector, the production of
inputs and outputs for those health services with a high and medium level of
measurability and contestability. Services possessing low contestability and low
measurability should be produced and provided by the government on account of the
collective benefits involved in those services like public health interventions, training of

2
Measurability is the precision with which inputs, processes, outputs and outcomes of given goods and
services can be measured.
3
Contestability exists when firms can enter the market freely without any resistance from other firms and
exit without losing any of their investments. Less barriers to market entry and exit characterize
contestable goods.

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specialised labour, knowledge generation about rare health conditions. This argument is
supported by the neo-classical theorists like Preker, Harding and Travis (2000).

Development Economics

Development Economics accounts for a strong positive correlation between health and
development (Gertler, 1990). Good health is considered to be a form of human capital
that influences the supply and productivity of labour force in the economy, thus will
contribute on its own to a country’s development (Strauss, 1986 and Behrman and
Deolalikar, 1988). Development economists argue that creating and maintaining a social
safety net that includes access to basic health care services to be one among the other
important roles of government that would in turn contribute to economic development
(Stiglitz, 2005). They also provide the framework to show how a government’s
investment in the health of its people can influence development of a nation. For this,
they bring in the human development approach framework which stresses the need for
government provision of essential health care services (preventive and curative) to large
sections of the population on a wider basis so as to attain the notion of ‘universal access
to health care’ (Prabhu, 1998).

The present study is designed in the above frameworks and aims to analyse the
government financing of health care in a developing economy context against the broad
policy changes that are underway. Juxtaposing them with the broad health care
outcomes, the study aims to analyse the links between health care financing and health
performance in a developing economy.

1.6 Review of literature

There is a plethora of literature studying the impact of structural adjustment on the

health sector. These studies highlight the linkages that exist between government
expenditure and the outcomes during the reform process. These studies can be
classified into purely theoretical studies and empirical studies that focus either on single

15
country cases or cross-country studies which compare the impact of adjustment process
on health across various countries.

The main focus of the theoretical studies (Banerji, 1993; Antia, 1995; Laurell and
Arellano, 1996) revolves around the adversities of the World Bank policies. They argue
that the Structural Adjustment Programme introduced in the developing countries is a
tool which acts as a medium to support the interests of the developed world. It is also
argued that these policies have rejected health both as a human need and as a social
right. Arguments by Olweny, 1994, Zaidi, 1994 and Pitt, 1993 reveal that the Structural
Adjustment Programme would lead to a cut in government spending on public health
services. The studies conducted by Cornia, Jolly and Stewart (1987), have revealed that
such policies have had negative effects on the poor as well as on human resource
development. These cuts would pave the way directly or indirectly for a decline in the
health and nutritional status of the people and the poor would ultimately have to bear
the ill-effects of these policies.

1.6.1 International studies

Some countries have shown positive results in terms of increased social outcome during
the adjustment period. A case study of Korea by Sang-Mok and Ha-Cheong (1992) show
that government expenditure on health and medical insurance were taken care during
the adjustment which showed an increase in the outlays, the result of which was a
decline in the infant mortality and maternal mortality rates. Similarly, a case study by
Kahn (1999) of Pakistan has observed that although health expenditures declined, there
was an improvement in the access to health services and also a decline in the infant
mortality rate, child mortality rate, maternal mortality rates and an increase in the life
expectancy.

Cross-country studies have also shown similar trends. A cross-country study by Van der
Hoeven and Stewart (1993) of eleven Latin American countries during the adjustment
phase reveal a decline in the child mortality rate and maternal mortality rates in all the
countries whereas there was a mixed response in terms of per-capita expenditure on

16
health, health expenditure as a percentage of total government expenditure and the
share of health expenditure to the GDP. Similarly, Jayarajah et al (1996) conducted a
cross-country study of fifty-three countries by dividing them in terms of regions-Asia,
Middle East and North Africa, Latin America and Sub-Saharan Africa. A mixed response
was witnessed among countries in variables like total expenditure on health, health
expenditure as a percentage to the total expenditure, real per capita spending on health
and health indicators in terms of the rate of decline in infant mortality rate. With the
exception of Asia, which showed an increase in all the variables the other countries
showed a mixed response to the above mentioned variables.

Pinstrup-Andersen et al (1987) have examined the impact of government expenditures

on health and education in 51 countries covering 10 African countries, 14 from Latin
America, 2 from Middle East and 10 South and South –East Asian countries. They
observe that, in Africa in 22 of the 50 countries, real per capita health expenditures on
health fell. In Latin America, per capita health expenditures declined in 8 of 16
countries. The fall in per capita health expenditures was greater for African countries as
against the Latin American countries. While wages were protected, the expenditure cuts
have been made in capital expenditures.

The case study by Cornia and Stewart (1988) in ten countries has shown that while the
social outcomes have improved in certain cases, they have worsened during the
adjustment phase in other countries. While countries such as Chile, South Korea and
Zimbabwe have witnessed an improvement in the social outcomes, other countries like
Philippines, Peru, Brazil, Sri Lanka, Jamaica, Ghana and Botswana witnessed a lag in the
outcomes.

Sahn and Rene (1995) in their case study of Sub-Saharan Africa observed that while the
real health expenditures have increased, the health indicators deteriorated and there
was strong bias towards curative care by completely ignoring the preventive health care
services. The impact of structural adjustment on health has shown negative trends in
the health indicators like infant and child mortality rates and there was also a decline in
the nutritional status of children in Zambia, Zimbabwe and Senegal as revealed by Logie

17
and Woodroffe (1993). All these happened on account of the cut in public health
expenditures towards important health services. The quality of services suffered and
there was a severe drain in health personnel on account of the lack of funds as shown
by Anderson and Michael (1994) in their case study of Jamaica during the adjustment
period. Israr et al (2000) in their case study of Cameroon observed that the introduction
of adjustment policies affected the health workers. The quality of health care decreased
in government health centres and there was an increased provision by private providers
and increased sale of the drugs by doctors and nurses from unreliable sources.

1.6.2 Studies related to India

Various studies on health care financing can be classified as studies in the pre-reform
phase and those conducted during the reform phase. These studies are by and large
empirical in nature.

1.6.3 Studies in the pre-reform phase:

Berman and Priti (1992) present an overview of the government financing of health care
in India until the Seventh Plan period. The study brings to light a number of lapses that
are observed in the government financing of health care. These problem areas include
inter-state disparities in health care spending, bias towards curative care services that
has resulted in low levels of allocation for preventive health care services, lack of
essential inputs in public hospitals and limited availability of health insurance for those
working in the formal sector. The authors conclude that rather than making higher
allocations, financing of health care should contribute to an improvement in the health
status of the population and also explore possibilities such that the money that is
directed towards the private sector should be regulated in a way that it addresses the
health care needs of the population.

Reddy and Selvaraju (1994) have analysed the trends in health care expenditures and
the inter-state variations in health expenditures of the government - central, state and
union territories for the period 1974-75 to 1990-91. They analyse the allocation of

18
resources by programs and sectors and the impact of components on health status by
classifying the states into major states, special category states and union territories It
was observed that the government health care expenditure increased in nominal and
real terms and also there was an increase in the share of all components on the public
health care (family planning, water supply and sanitation, nutrition and child and
handicap welfare) except medical and public health which witnessed a decline. The
state’s share of health expenditure also declined during this period as against the centre
and the union territories. The inter-state disparities varied across states with richer
states performing well on account of increased income and expenditure on health,
whereas the poorer states lagged behind. In terms of central allocation of resources for
various programs, more than 60 per cent of the funds were directed towards curative
services in 1990-91. The study also observed that more than 68 percent of the
allocations for medical, public health and family welfare were directed towards the urban
areas in the same period. Another important finding was that the poor allocations
towards the rural sector was coupled with direction of more than 70 per cent of the
resources towards the curative services, thereby giving the rural sector negligible
importance both in terms of per-capita and sector wise allocations. By making use of a
multiple regression analysis of each expenditure components on the health status, it was
observed that the health expenditures affected the health status, but not significantly.
Taking due consideration of this results, the authors have called for the need to
reprioritise the available scarce resources in an efficient manner.

Deolalikar and Vashishtha (1996) argue that India’s total health sector development is
suffering not on account of lack of funds, but due to the inefficiencies associated with
expending of the resources. Analysing the health expenditures they observe that the
major problem lies with the distribution of the government’s health resources across
states and between regions (rural and urban) and among different categories of health
care. They suggest that equity and efficiency of health expenditure can be achieved by
better targeting of resources towards the poorer states wherein the health status is very
poor. For this, emphasis should be given for primary health care, disease control
programmes and integrated child health and nutrition programs than focussing on
secondary and tertiary health services.

19
1.6.4 Studies during the reform phase:

Prabhu and Somnath (1993) have examined the trends, size and composition of state
government expenditures on health, education and nutrition in fifteen major states of
India in order to assess the impact of the stabilisation measures on human development
indicators. They identify that between the two sub-periods 1974-75 to 1984-85 and
1985-86 to 1991-92 selected by the study, there was a sharp decline in all categories of
expenditure in the latter period towards per capita government expenditure, per capita
social sector expenditure and per capita medical and public health expenditure. They
also observe that expenditure on education had increased at the expense of health
expenditure. Among the states, Kerala led the human development front while failing on
the economic front. On the contrary, Punjab’s performance with respect to State
Domestic Product was commendable; although its performance in Human Expenditure
Ratio (HER), Social Allocation Ratio (SAR) and Social Priority Ratio (SPR) remained low
compared to Kerala. The BIMARU states continued to figure amongst the lowest ranking
states with respect to both state income levels and human development. The study
concluded that the increase in the allocations to the social sectors must be coupled with
reallocation of resources in favour of primary level facilities and improving the quality
and efficiency of such services.

Tulsidhar (1993) reviews the impact of stabilisation policies in the form of expenditure
compression measures on the allocation of resources made towards health sector both
by the central and state governments. The study observed that there was a reduction in
public health expenditure on account of the fiscal measures introduced in the country.
He also observes that there have been reductions in net transfers to states even during
the pre-reform period (1985-91). There were also a reduction in the central grants for
disease control programs and family welfare programs. The per capita expenditure on
disease control programs showed considerable reductions. Further, a major portion of
the expenditure on medical and public health care were directed towards wages and
salaries. The reduced allocations are manifested in the form of cuts in capital
expenditure on health. Based on such findings, the author concludes that the reduction

20
in public health expenditure on the health sector would affect the provision of health
care services and the brunt of the expenditure compression measures will have to be
largely borne by the poor.

Duggal et al (1995a) examine the expenditure on health at the aggregate level (All
India) on broad categories of health services for various time points from 1950-51 to
1994-95. They observe that the revenue expenditure on health as a per cent to the total
revenue expenditure of the government has shown a declining trend during the 1970s
itself and this trend was more marked during the nineties and has been the lowest ever
in 1994-95. Among the broad categories of health expenditure, the most persistent
declining trend has been observed in case of the expenditure on hospitals and
dispensaries since the eighties. The expenditure on disease control programs although
declined over the years, has remained more or less stable during the reforms. Medical
education, training and research have gained during the reforms. Family welfare
expenditure has grown up until 1991 (19.39 per cent) has declined to 16.8 per cent in
1993-94. The per capita expenditure on health has increased in all the states. However,
the revenue expenditure on health as a percentage to the total government revenue
expenditure has declined right from 1980-81 onwards in all the states and the decline is
more prominent in all the low income states and also a few high income states like
Haryana, Gujarat and Punjab. They also examine the item wise allocation (salaries,
commodity purchases and so on) in eight states and have observed that salaries take
away a greater proportion of the expenditure on all heads of account and these are
greater in case of Primary Health Centres (around 85 per cent on salaries) and also in
case of disease control programs leaving a small fraction for other remaining services.

In yet another study of a similar kind, Duggal et al (1995b) analyse the state level
variations in certain broad categories of expenditure under the purview of medical and
public health (national disease program, hospitals and dispensaries, medical education,
training and research, family welfare for various time points starting from 1950-51 to
1994-95 and Maternal and Child Health for time points from 1975-76 to 1994-95. The
study finds that the expenditure on disease control programs as a percentage of the
total health expenditure have shown a declining trend since 1985-86 and the allocations

21
have worsened during the reform years in states like Bihar, Karnataka, Kerala, Punjab,
Madhya Pradesh, Maharashtra and Rajasthan despite an increase in the mortality and
morbidity due to malaria, tuberculosis, diarrhoea, infectious diseases, AIDS etc. While
the share of medical education, training and research has gone up considerably in
almost all states including the poorer states like Bihar, Orissa and Uttar Pradesh, since
1985, the share of expenditure on hospitals and dispensaries has declined. The share of
family welfare in the total health expenditure has gained during the entire eighties in all
the states and has experienced a slight decline since 1991 until 1994, not much affected
in the initial years. The expenditure on Maternal and Child Health also shows a similar
trend in all the states.

Prabhu (1996) in a case study of India has compared the social sector performance in
different Indian states during the Structural Adjustment Programme. It was observed
that while some states like Tamil Nadu and Kerala protected their social sectors during
the adjustment process, Punjab, although it has high development indicators has
witnessed a setback in the social sector in the form of reduced government spending
during this period. Therefore the author suggests that public health should be in the
domain of the state but programmes like Maternal and Child Health services should be
financed by the central government. It is argued that even when the state governments
wanted to protect the social sector (by maintaining the ‘real’ level in pubic expenditure),
they were not able to do so because of the pressure to meet the fiscal deficit reduction
targets and they chose to cut social sector expenditure.

Garg (1998) studied the financing and delivery of health care in India on the basis of
equity in health care finance and delivery with respect to self-reported ill-health using
secondary data from various sources. The study found that it is difficult to assess the
redistributive effect of private payments as they constitute three-fourth of the total
health spending in the country. In the case of government expenditure, the study
observed a bias in terms of the allocation against the poor, the rural areas and the
urban unorganised sector. It was also identified that the poorer income groups had to
spend a high proportion of their income on health care and medicines on account of the
rising costs of medical goods and services.

22
Prabhu and Selvaraju (2001) analyse the trends in real per capita government
expenditure on health across fourteen major Indian states for three periods (1980-81 to
1987-88, 1988-89 to 1991-92 and 1992-93 to 1996-97). Growth of public expenditure
on health across states has been analysed using the kinked exponential growth model
has been analysed that allows for a comparison of the growth rates during the three
phases separately. The estimates revealed positive and relatively high growth rate of
expenditure on health for the first period, a negative growth rate in the per capita real
expenditure on health with the exception of six of the fourteen major states in the
second period and a recovery in the growth of real per capita expenditure in the third
period which was very much lower than the growth observed in the first phase. They
conclude that these trends in the growth rate of per capita real expenditure on health
render bad signals for achieving the goal of ‘Health for All’.

Kadekodi and Keerti Kulkarni (2002) in their study observe that the budgetary
allocations of the Centre on health in the form of per capita spending or its share in the
Gross Domestic Product or its share in the total revenue expenditure have shown a
marginal increasing trend during the period 1980-81 to 1998-99. As against this, their
study finds that the States’ spending on health from their revenue budget remained
fairly constant over the period 1980-81 to 1991-92, and since 1992 there has been a
slight decline in the share of health expenditure both as a per cent of Gross Domestic
Product as well as in the total revenue expenditure of the states and the shares have
further declined in 1996. However, the per capita health care expenditure of the Centre
and States’ has increased over the study period. They have also attempted to link the
performance and process inputs of the health sector and for this purpose, factor analysis
was carried out in order to get a composite picture of the health performance, health
related human capital and health infrastructure. A simple correlation analysis between
the three indicators before and during the reforms period has been carried out to study
the nature of linkages. The coefficients show that there was a high degree of association
between health performance and health manpower during 1980 to 1990. The results
also show that while the emphasis was on infrastructural development in the eighties,
the same has shifted to manpower development in the nineties. They also analyse the

23
linkage between the health related sectors and other sectors of the economy in order to
identify the degree of linkages of the health sector with other sectors. The results show
that over a period of time, the forward linkage of the medical and health care sector has
increased whereas backward linkage has declined indicating that the development of
this sector will depend more and more on the advancement of technology, inflow of
foreign capital, import of drugs etc. Drug and pharmaceutical sector has in comparison
to other sectors relatively quite high forward and backward linkages indicating that
Indian drug and pharmaceutical sectors are becoming more and more dependent on
exporting, imports of foreign drug intermediaries and reliance on foreign technologies.

Kaur and Sangita Misra (2003) analyse the pattern of expenditure on education and
health across the major states. They observe that the Ninth Plan allocations on social
sector have directed 9.9 per cent of the total amount to medical and public health as
against 29.3 per cent of the expenditure on education. Also the allocations for health
sector have remained a low priority area in most of the states and the share of health
expenditure in their Gross State Domestic Product has remained low and declined in
eleven of the fifteen major states. In 2000-01, not only did this ratio remain low in most
states but also the per capita real expenditure on health per annum showed negative
growth rates in Haryana, Maharashtra, Tamil Nadu and Uttar Pradesh. The recoveries in
the health sector from user charges have remained low through out and account for
small proportions of corresponding revenue expenditure for most states. They also
empirically analyse the impact of education and health expenditure on corresponding
attainment indicators that have direct as well as distributional impact for 14 major states
over the period 1985-86 to 2000-01 using the log-linear model. The findings of the
health regression reveal that per capita income is relatively more important vis-à-vis
state spending in influencing health outcome and Total Fertility Rate moves in the
direction of Infant Mortality Rate and quite significantly. In terms of the infrastructure
variables, the number of hospitals per 100 square kilometres turns out to be more
significant in influencing the mortality rate in the states. Further, to see whether health
expenditures affect human development, they calculated simple rank correlation
coefficients between Human Development Index ranking of the states and per capita
health expenditure of different states and observe that the coefficients between Human

24
Development Index and health turns out to be high. Also, the study observes that there
is no consistency between the per capita health expenditure and rural-urban gap in
Infant Mortality Rate in most of the states indicating that state spending seems to play a
less important role in explaining the rural-urban differentials that prevail in these two
variables in the states.

Dev and Jos Mooij (2004) have analysed the trends in social sector expenditure at three
levels of government: (a) combined – Centre and States (b) Centre and (c) States. The
analysis for the combined expenditure by the Centre and States reveal that the share of
health expenditure in the Gross Domestic Product and total expenditures have shown a
mixed response and have even increased after the mid-nineties. The per capita social
sector expenditure has increased during the reform years showing a 75 per cent
increase in eleven years (between the periods 1990-91 to 2000-01). However, the share
of the States’ spending on social sector has declined to 80.7 per cent in 2000-01 from
85.2 per cent in 1990-91. The share of the states in medical and public health, water
supply and sanitation and also family welfare from their total spending has declined. In
terms of the intra-sectoral allocation of expenditure (1992-93 to 2002-03) on health and
family welfare by the states, the share of expenditure on public health in the total health
expenditure has declined drastically from the late nineties, while the share of Maternal
and Child Health services has increased to about 15 per cent in the late nineties from
about 5.0 per cent in 1992-93. They conclude by saying that greater allocations have to
be made in the social sector expenditure, more importantly, the available resources be
spent in an efficient manner, curb the misallocation of funds and also enhance the
quality of these expenditures.

1.7 Research gaps

As evident from the review of literature, there are several studies both theoretical and
empirical that examine the impact of stabilisation measures and Structural Adjustment
Policies on the health sector spending by the governments at the national as well as the
international level. While there are some analytical studies discussing the core issues in

25
the government health care financing in the Indian context, they by and large confine to
the pre-reform phase.

The studies that have been conducted during the reform phase have examined the
composition and trends in health expenditures; however they pertain to the early years
following the initiation of reforms. Also most of these studies have been at the
aggregate level in terms of central and state government expenditures. Very few studies
have made an attempt to examine the behaviour of health care spending by the
individual states during the reforms. The studies conducted during the reform phase
have not adequately analysed the implications of the deficit reduction measures on
health sector spending in the States.

Moreover the studies attempted during the reform phase have not given adequate
treatment to the issues such as the impact of the health care inputs and the outputs by
the states on the health outcomes. The present study proposes to bridge this gap by
blending macro level data with the data at the state level using information from the
recent health surveys and attempt to study the directional changes that have occurred
in the health care expenditure both at the aggregate and disaggregate level and their
implications on the health outcomes.

Another important aspect that these studies in the Indian context have almost ignored
to examine are issues pertaining to the role of state such as whether the government
spending on health is on the right kind of interventions, whether the health care
expenditures are being directed in accordance with the health care needs of the state,
whether the current spending levels are adequate to address the health care needs of
the people and how the health care needs of the people be addressed under the new
circumstances of a reduced state intervention in the provision of goods and services.
Hence, it would be of interest to examine the efficiency in the distribution of health
expenditures of the government of at least one state and the present study intends to
carry out an analysis of this kind.

26
1.8 Objectives of the study

Against the above backdrop, the following objectives have been formulated for the
present study.

1. To critically evaluate the various government health policies and examine

their adequacy and relevance in the light of prevailing health needs.
2. To study the fiscal deficit reduction measures and analyse their implications
on health care spending by the government.
3. To analyse the growth and behaviour of government expenditure on health
care across the selected Indian states before and during reforms.
4. To assess the health system performance in Indian states.
5. To study the efficiency of expenditure on health care services by the
government and examine its adequacy against the health care needs of the
people and also identify the role of state in provision of health care services
under the changed scenario.
6. To draw policy inferences to suggest strengthening the health sector in the
country.

1.9 Methodology

The entire analysis and estimations have been confined to the fourteen major states of
India (Andhra Pradesh, Bihar, Gujarat, Haryana, Karnataka, Kerala, Madhya Pradesh,
Maharashtra, Orissa, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh, and West Bengal) 4.
To get a more clearer and comparative picture of the issues raised by the study, the
analysis has also been done where ever necessary, by classifying the fourteen major
states into three categories on the basis of their income levels - High Income (Gujarat,
Haryana, Maharashtra, and Punjab), Middle Income (Andhra Pradesh, Karnataka, Kerala,
Tamil Nadu, and West Bengal), and Low Income (Bihar, Madhya Pradesh, Orissa,

4
Few states like Bihar, Madhya Pradesh and Uttar Pradesh were bifurcated in the year 2000 to form more
states - Jharkhand, Chattisgarh and Uttaranchal respectively. The expenditure incurred by these newly
formed states has been incorporated along with the above mentioned three states to maintain
consistency with the previous years’ data.

27
Rajasthan, and Uttar Pradesh). A more detailed analysis of Karnataka is taken up to
study if the health care expenditure is reflecting the health needs of the public.

To accomplish the above mentioned objectives, the study employs both descriptive
statistics and econometric estimation techniques. Statistical tools such as coefficient of
variation and simple correlation have been used to examine the inter-state variations for
different variables and the linkages between variables. The analysis of the growth of
health expenditure must make allowances for the changes in price and population
because these are the permanent factors that influence the expenditure. This is on
account of the fact that with increase in the price levels, the cost of providing health
care services also increases thereby, raising the expenditure levels. Also, when the size
of the population increases, more services needs to be provided to cater to the needs of
the growing population which further pushes the expenditure levels. Therefore, to
examine the real growth in health expenditure, it needs to be adjusted for the growth in
price as well population. Due to lack of a suitable index that accounts for government
purchases, the implicit deflator of the State Domestic Product has been used to analyse
the real growth in health expenditure since it gives an overall picture of the economy.
The year 1993-94 is taken as the base year for the analysis.

The Kinked Exponential Model has been used to study the sharp variations in the growth
pattern if any in health expenditure of the Centre, States and All India. The panel data
method has been used to identify the impact of fiscal reforms on health spending by the
governments and the determinants of health sector spending in the states. The health
system performance – the impact of health inputs on the health outcomes has been
examined by adopting the Stochastic Production Frontier (SPF) approach using the panel
data method and the technical efficiency of the states in attaining their health outcomes
have been estimated using the state-specific coefficients obtained from the Fixed Effect
Model. A detailed analysis of the allocative efficiency of health expenditures vis-à-vis the
health care needs has been attempted in case of Karnataka by studying the item wise
distribution of health expenditure spent made by the state and classifying the various
diseases under important categories. The pattern of expenditure allocation for diseases
against the prevalence of diseases have been analysed and based on the allocative

28
pattern and disease burden in the state, a framework has been developed recognising
the role of state in the context of its health care needs.

1.10 Time frame

The study has chosen the time period 1985-86 to 2004-05 to examine the trends in
health care expenditures in the fourteen major states. In the case of the intra-sectoral
allocations of health expenditures and for the trend analysis of the major fiscal variables,
the time period considered by the study is from 1974-75 to 2004-05. The health care
input variables in the form of health infrastructure (hospitals, primary health centres,
sub-centres and beds) and health manpower (doctors and nurses) have also been
considered for the period 1985-86 to 2004-05. The efficiency in the distribution of health
expenditure by government in Karnataka has been studied from 1990-91 to 2004-05
and the health care utilisation and mortality pattern in the state has been taken from
1986-87 to 2002-03 supplemented with the findings from the survey conducted by the
National Sample Survey Organisation on morbidity and health care utilisation across the
country in 2004-05.

1.11 Data sources

The relevant data for this study have been obtained from secondary sources and the
main data sources are as follows. The expenditures on health and family welfare by the
state governments, the total expenditures of the states and the social sector
expenditures are collected from various issues of Study of State Finances, published by
the Reserve Bank India, Mumbai. Data on fiscal indicators like the gross fiscal deficit and
revenue deficit, the transfer of resources from Centre, interest payments, revenue
receipts and revenue expenditure have been taken from the Handbook of Statistics on
State Government Finances published by the Reserve Bank India. The data on
population of the states have been taken from the statistics on population projections
published by the Office of the Registrar General and Census Commissioner. The Gross
Domestic Product (GDP) and Net State Domestic Product (NSDP) at factor cost of the

29
states have been obtained from National Accounts Statistics published by the Central
Statistical Organisation. The data on the health outcomes – the Infant Mortality Rate has
been taken from various issues of the Sample Registration System published by the
Registrar General of India and Life Expectancy at Birth from Health Information of India
published by the Central Bureau of Health Intelligence (CBHI), Ministry of Health and
Family Welfare. The statistics on the health care inputs like the health infrastructure and
health manpower have been taken from various issues of Health Information of India
and the Statistical Abstract of India. The data on coverage and utilization of health care
services in the states has been taken from various rounds of the National Family Health
Surveys I, II and III conducting during 1992-93, 1998-99 and 2005-06 respectively. For
the state level analysis of allocative efficiency of health care expenditure, the data on all
health care services rendered by the government have been taken from the Detailed
Estimates of Expenditure, Volume-IV of the Demand for Grants of the Government of
Karnataka. The statistics on in-patient and out-patient care rendered for various
diseases in hospitals and dispensaries and mortality due to various diseases in Karnataka
has been obtained from the Bureau of Health Intelligence (BHI), Directorate of Health
and Family Welfare, Government of Karnataka.

1.12 Organisation of the thesis

The thesis contains seven chapters. The first chapter is an introductory chapter that
deals with the statement of the problem, review of literature, research gaps, objectives,
methodology and data source, scope and limitations. In the second chapter, the health
care policies and developments in the country over the years and the plan interventions
for health sector development have been reviewed and discussed. The empirical analysis
of the implications of the fiscal deficit reduction measures on health sector spending by
the states and the determinants of health sector spending is discussed in the third
chapter. The trends and behaviour of health sector expenditures, the status of health
care outputs and outcomes in the fourteen major states before and during reform phase
are presented in chapter four. The performance of health systems in the fourteen major
states is presented in the fifth chapter. The efficiency of the distribution of expenditure
for health services by the government vis-à-vis the health care needs of a state with

30
particular reference to Karnataka and identifying the role of state in the light of the
expenditure allocation and diseases pattern in the state is the focus of the sixth chapter.
The summary, conclusions and policy implications are presented in the seventh chapter.

1.13 Limitations of the study

The study attempts to examine the health care interventions by the government and its
effects on the outcomes. Health care outcomes are caused due to interventions by
various players that include the government, private sector, Non-Government
Organisations and external agencies. It is very difficult to segregate the impact of the
interventions by each player on the outcomes and also unfair to account the
government interventions alone for the prevailing outcomes. In the absence of such
detailed information on the interventions by different players and considering the
importance of government intervention in influencing the outcomes, the present study
has attempted to analyse the impact of health care interventions by the government on
the prevailing health outcomes. This can be considered as one of the limitations of the
study. Another issue is that the study has considered the fiscal reform phase from 1991
in view of the announcement of the New Economic Policy during this year. Several
additions were made to the policy subsequently and it is also not possible to document
the exact period of initiation of reforms by each state and carry out the analysis
accordingly and hence the year 1991 is taken as the period characterising the fiscal
reform phase. It should also be borne in mind that the impact of reforms may not
happen instantaneously; rather it takes a longer time for the policy changes to show
consistent results. Nevertheless, such analysis can portray the prevailing fiscal as well as
health scenarios in the states under the changed regime. This could be another
limitation of the study.

31