GOVERNMENT HEALTH FINANCING IN INDIA: CHALLENGES IN ACHIEVING AMBITIOUS GOALS

GOVERNMENT HEALTH FINANCING IN INDIA:

CHALLENGES IN ACHIEVING AMBITIOUS GOALS

Peter Berman, Rajeev Ahuja, Ajay Tandon, Susan Sparkes,

Pablo Gottret

Abstract

: The Government of India has publicly committed to a doubling or trebling of

government health spending by 2012 and launched a major program, the National Rural

Health Mission (NRHM), to help spend the additional funds and achieve better health

outcomes. This paper reviews recent data on trends in government spending and various

scenarios of central and state funding to assess the feasibility of achieving these financing

goals. The goal of 2 percent of GDP for government health spending is unlikely to be

achieved, although there is clear evidence of program growth. Much larger state-level

spending is needed to accelerate overall government spending in India’s federal system.

In addition, there is evidence of constraints in the ability to spend significantly increased

budgets in a timely way and possible state substitution of increased central funding for

existing state budgets. Significantly increasing government health spending in India

requires more than simply raising budgets at the central level. NRHM does show some

positive effects, but the rapid gains envisaged will require greater efforts to address the

shortcomings of government systems and creative approaches to India complex federal

financing system.