Understanding public healthcare expenditures by the Government of India

By Avishek Majumder & Abhinash on December 6, 2018

Forecasting public health expenditure by the Government of India is an important aspect to assess the government’s effectiveness towards disease control and policy implications. Assessing the trend in the public healthcare expenditure by the central government, predicted that the public health expenditure will get doubled in the next five years. Expenditures will rise from 267000 crores rupees in the year 2018 to 486000 crores rupees in the year 2022 (Ministry of Health & Welfare, 2017). However, this increase in the public health expenditure from the year 2018 to 2022 is expected to be 45%. The growth rate of the public health expenditure is constant but, this public health expenditure constitutes a very small portion of the total GDP of the country. Therefore, with the ever-increasing population, this growth rate is not sufficient to meet the rate of increasing population.

Allocation of funds to the states

The increasing trend of public healthcare expenditure also eludes to rise in healthcare issues, especially vector based diseases like Malaria. The budget for the public health expenditure, allocated to the state government on the basis of the state income and the health index. States with higher urban population or rural or tribal population are most likely to have higher funds allocated for the public health expenditure (Hooda, 2015). For example, healthcare expenditures allocation is high for states, Maharashtra, Madhya Pradesh, Odhisa, Andhra Pradesh, Rajasthan, and Chhattisgarh. These states also report the highest density of malaria cases and mortality.

Forecasting public healthcare expenditure by government of India
Forecasting public healthcare expenditure by Government of India

Factors impacting the public health expenditure

The major factor that impacts the determination of the public healthcare expenditure is the GDP of the country. The growth in GDP is directly proportional to the amount of budget allocated to public health (Han, Cho and Chun, 2013). Population explosion also impacts the allocation of appropriate public health expenditure. Furthermore, the increase in population leads to greater demand for healthcare facilities and increases the total medical cost per capita. The infectious diseases thereby cause the cost burden on the population due to high out of cost expenses (Ke, Saksena and Holly, 2011).

In every five year plan, major diseases that pose the most economical burden on the society are identified and the public health expenditure is determined accordingly for control & eradication.

Factors impacting the public health expenditure
Factors impacting the public health expenditure

However, a multiplicity of governments, agencies, healthcare schemes, and departments impact the efficient allocation of public healthcare expenditure. The complicated infrastructure of public health expenditures in India also contributes to challenging the public health expenditure (Srinath et al., 2018). Autonomous agencies of the state governments for implementing state initiated healthcare programmes causes the central government to lose track of the efficiency of the initiatives. Moreover, fiscal decentralisation of the central power to state and local governments lead to poor accuracy of spending on healthcare (Srinath et al., 2018). Lastly, data digitisation, one big issue faced by the central and the state government in the allocation of public healthcare expenditure. Lack of proper documentation and digital connectivities hinder the government to efficiently allocate healthcare funds.

Public health expenditure allocation in India

Public healthcare expenditure is the total amount allocated for developing the health status and services of the country. In India, public health expenditure is not adequate as it constitutes a very low percentage of the GDP (Rao, 2018). This contributes to slow growth in achieving the goals set for the eradication and management of diseases in India.

Infrastructure of public healthcare expenditure by Government of India (Srinath et al., 2018)
Infrastructure model of public healthcare expenditure by the Government of India (Srinath et al., 2018)

Public healthcare expenditure budget is allocated depends on various factors, disease prevalence being on the major aspect (Srinath et al., 2018). The expenditures allocated to the state governments are in the form of National Health Mission (previously, NRHM), Mukhyamantri Swasthya Seva Mission, Ayushman Bharat initiative, and NITI Aayog (Pricewaterhouse Coopers, 2018). The Comptroller and Auditor General of India (CAG) is the only institution under the Government of India that is responsible for assessing the allocation of expenditures of healthcare budgets to local, rural and state governments (Pricewaterhouse Coopers, 2018). At the end of each year, they evaluate and forecast the expenditures and financial accounts for states and union territories. In this way, the central government analyzes which state or local body is efficiently using the allocated healthcare expenditures.

The following table presents a list of all state and local healthcare initiatives in India. The central government also provides grants to state-based initiatives mentioned in the table. They get the support of the central government as well as the state government’s budgetary allocations.

Himachal Pradesh
Mukhya Mantri State Health Care Scheme
Punjab Punjab Government Employees and Pensioners Health Insurance Scheme
Rajasthan Bhamashah Swasthya Bima Yojana, State Insurance and Provident Fund Department, Rajasthan Chief Minister’s Relief Fund
Madhya Pradesh MP Swasthya Suraksha Yojana
Uttarakhand Mukhyamantri Swasthya Bima Yojana and U-Health Card
Arunachal Pradesh Arunachal Pradesh Chief Minister Universal Health Insurance Scheme (APCMUHIS)
Assam Atal Amrit Abhyan, Assam Aarogya Nidhi, Sneha Sparsha
Tripura Tripura Health Assurance Scheme for Poor
Jharkhand CM’s Health Insurance Scheme, Sarva Swasthya Mission,

Prime Minister Jan Swasthya Yojana

West Bengal West Bengal Scheme, Swasthya Sathi, Mabhoi Scheme
Odisha Biju Krushak Kalyan Yojana
Gujarat Mukhyamantri Amrutum and Vatsalya Yojana, Chiranjeevi Yojana
Goa Chief Minister’s Comprehensive Health Insurance Scheme
Kerala Comprehensive Health Insurance scheme
Bihar Janani Evam Bal Suraksha Yojana
Telangana Aarogyasri


I am currently working as a Research Associate. My work is centered on Macroeconomics with modern econometric approach. Broadly, the methodological research focuses on Panel data and Times series data analysis for causal inference and prediction. I also served as a reviewer to Journals of Taylor & Francis Group, Emerald, Sage.