Fiscal Doldrums and Public Health Spending in the Fragile North Eastern States of India

Abstract

Fiscal space outlined the budgetary space that enables the states to manage the resource requirements, also guaranteeing fiscal sustainability. Majority of the north eastern states are the small category states, barring Assam. The states are featured with poor economic and revenue base and overall fiscal doldrums which make the analysis interesting to establish how these poor economic and deteriorating fiscal structures which often push the states for expansionary fiscal policy. Such poor economic and revenue base of the states affect public health disbursement. Therefore, we attempt to explore the connection between the macroeconomic parameters and public health spending in the north eastern states using panel data analysis. The results obtained do not seem to be encouraging, rather dispiriting.  The results clearly represented the poor growth of macroeconomic parameters, therefore incapable for a radical effect on public health expenditure. The study found Fiscal capacity and tax revenue positively affects the share of health expenditure to GSDP. The effect was significant, however negligible. Alternative parameters such as per capita GSDP, state’s own revenue and non-tax revenue negatively affect the share of health expenditure to GSDP that contradicts the expectation of achieving an increment publically health disbursement with better fiscal space.