Student Dissertation

Agency : Health Expenditure; GDP; Health Economics

Objective : To understand the health expenditure (respective to GDP) trend from 1987-2014 in 15 states of India.

Background : GDP is a broad measurement of a nation’s overall economic activity. Even though, there are number of theories on the relationship between government expenditure on health and economic development; the two approaches, viz., the Wagnerian and Keynesian approaches have received more attention. This paper examines the casual relationship between health care expenditure and economic growth on the fifteen states of India based on an annual data series from the period 1987 to 2014. The necessary information collected from various sources was analyzed.

Methodology : A descriptive study which is done by collecting the secondary data from the Indiastat, Planning Commission and other GOI sites that are used to analyze the impact of public spending on GDP in fifteen states of India. The data is analyzed on SAS (Statistical Analysis System) from 1987 to 2014 using different tests.

Findings : This study indicates that health expenditure affects GDP significantly in 10 out of 15 states. Five states-Assam, Gujarat, MP, Punjab and West Bengal show that there is no significant impact of health expenditure on GDP. It also concludes that 12 states have GDP impact on health expenditure. Three states- Andhra Pradesh, Maharashtra and Punjab show that there is no impact of GDP on health expenditure. When we analyze the health expenditure trends in all 15 states it shows that after 12-13 years from 1987, it rose year by year continuously.

Recommendations :These results revealed that there is bidirectional causality from health expenditure to economic growth. This study indicates an existence of an inter-link between health expenditure and GDP in India. However, while fluctuations in the health expenditure seem to impact GDP, the same is also true for vice versa. But a separate study can be done on individual states to find out common factors that affect both health expenditure and GDP.


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