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.
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