Abstract
Public spending and subsidies on health are justified because markets fail to deliver services equitably and also because of the large externalities associated with public health services. But attempts are on in India to phase out subsidies emanating from budgets to non-merit services. This article attempts to estimate and analyse the extent of budgetary subsidies in the health sector during 1985- 86, 1991-92 and 1998-99 covering six major states in India. The analysis sug gests that the budgetary allocations to the health sector have been declining while at the same time the cost of treatments for households has been increasing as evidenced by the two surveys of the NSSO. The survey results also suggest that the utilisation of public health facilities by the poor has witnessed a declining trend.
An analysis of budgetary spending and subsidies on health reveals that the level of spending or subsidies does not have any direct bearing on the level of health status. The complementary nature of budgetary spending and household spending on health warrants an increasing role for the governments in the health sector in order to improve the levels of health care consumption. Therefore, attempts to prune the budgetary subsidies or the spending on health would adversely affect the utilisation of the health care services.
Get full access to this article
View all access options for this article.