Determinants of Public Expenditure on Health in India: The Panel Data Estimates

There is high inter-state variation in public expenditure on health across states of India. This paper examines the degree to which this discrepancy in health expenditure is explained by income and other socio-economic-demographic factors. Findings show that the responsiveness of health spending is sensitive (with elasticity less than one) to change in per capita income of the state. The fiscal capacity and participation of people in politics of a particular state and health policy reforms initiated in 2005 play a significant role in positively influencing the government health expenditure. The demographic factors, however, are less likely to influence the spending on health.