Fiscal Policy Determinants of Health Spending in India: State Versus Center

Deepak Kumar Behera, Dil Rahut and Umakant Dash
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Deepak Kumar Behera: Department of Economics and Finance, The Business School, RMIT International University, Ho Chi Minh City, Viet Nam
Umakant Dash: Institute of Rural Management Anand, Gujarat, India

Asian Development Review (ADR), 2024, vol. 41, issue 02, 325-347

Abstract: This study uses data from 1986 to 2021 and the auto-regressive distributed lag model to explore India’s fiscal policy determinants of government health spending. The results find two structural breaks in time: (i) 2002 for state government health spending (SGHS) and (ii) 2014 for central government health spending. The results also show that central revenue transfers to states have a positive and statistically significant effect on SGHS in the long run. The results imply that a 1% rise in central revenue transfers to states leads to a 0.399% increase in SGHS. Further, state government public debt exhibits a negative and statistically significant relationship with SGHS, implying that a 1% rise in public debt leads to a 0.119% fall in SGHS in the long run. Fiscal management (i.e., revenue mobilization and debt sustainability) is essential to prepare a long-term strategy for health-care financing.

Keywords: auto-regressive distributed lag model; fiscal policy; government debt; government health spending; government revenue (search for similar items in EconPapers)
JEL-codes: C54 E62 H30 H61 I18 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1142/S0116110524500100

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