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Cyclicality of public health expenditure in India: role of fiscal transfer and domestic revenue mobilization

Author

Listed:
  • Deepak Kumar Behera

    (Public Health Foundation of India)

  • Ranjan Kumar Mohanty

    (National Institute of Public Finance and Policy)

  • Umakant Dash

    (Indian Institute of Technology Madras)

Abstract

The motivation for the exploration of the cyclical behaviour in public health expenditure is derived from the level of heterogeneity in public health services associated with a low level of fiscal space among the Indian states. The fiscal space for health literature argues that the growth of public health expenditure is influenced by the conducive macroeconomic environment such as sustained economic growth and increases in overall government revenue. Examining the role of fiscal space components on the cyclical behaviour of public health expenditure has remained unnoticed in the earlier literature, especially in the Indian context. Therefore, the study attempts to examine the cyclical behaviour in public health expenditure with respect to both output and revenue fluctuation by controlling fiscal transfer and lagged fiscal deficit, using system generalized method of moment regression approach. The cyclicality of public health expenditure is examined for all 28 states, general category states, and special category states separately for the period 2000–2016. The empirical results show that public health expenditure is pro-cyclical in both boom and recession period in India. The results find that economic growth, tax revenue, and central transfers have a positive and significant effect on public health expenditure among the Indian states. It also confirms that health is a necessity in India. It finds that central fiscal transfers play a significant role in the special category states than the general category states in order to finance the health sector. This study suggests that more focus should be given for the enhancement of fiscal space for health sector through revenue mobilization and smooth flow of central fiscal transfers among the Indian states.

Suggested Citation

  • Deepak Kumar Behera & Ranjan Kumar Mohanty & Umakant Dash, 2020. "Cyclicality of public health expenditure in India: role of fiscal transfer and domestic revenue mobilization," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 67(1), pages 87-110, March.
    • Handle: RePEc:spr:inrvec:v:67:y:2020:i:1:d:10.1007_s12232-019-00333-w
    DOI: 10.1007/s12232-019-00333-w
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    Cited by:

    1. Deepak Kumar Behera & Umakant Dash, 2020. "Is health expenditure effective for achieving healthcare goals? Empirical evidence from South-East Asia Region," Asia-Pacific Journal of Regional Science, Springer, vol. 4(2), pages 593-618, June.
    2. Indrani Gupta & Samik Chowdhury & Avantika Ranjan & Diwas Singh Saun, 2021. "Priorities in Budgetary Allocations for Health during the Fourteenth Finance Commission: Evidence from Five States," IEG Working Papers 419, Institute of Economic Growth.
    3. Mohanty, Ranjan Kumar & Behera, Deepak Kumar, 2020. "How Effective is Public Health Care Expenditure in Improving Health Outcome? An Empirical Evidence from the Indian States," Working Papers 20/300, National Institute of Public Finance and Policy.
    4. Hemachandra Padhan & Deepak Kumar Behera & Santosh Kumar Sahu & Umakant Dash, 2023. "Does Corruption Hinderance Economic Growth Despite Surge of Remittance and Capital Inflows Since Economic Liberalization in an Emerging Economy, India," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(1), pages 426-449, March.

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    More about this item

    Keywords

    Public health expenditure; Cyclical behaviour; Revenue mobilization; Fiscal transfer; Generalized method of moment;
    All these keywords.

    JEL classification:

    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General

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