DOES FISCAL DEFICIT CONSTRAIN PUBLIC HEALTH EXPENDITURE? EVIDENCE FROM HARYANA

Povzetek

This study analyses the correlation between fiscal deficit trends and public health spending in the Indian state of Haryana from 2004–05 to 2023–24. The paper employs a state-level time series derived from RBI State Finances data to estimate various econometric models, evaluating the extent to which fiscal stress limits health expenditure. These encompass ratio-based models, log-linear income models, lagged deficit assumptions, and disaggregated assessments of revenue and capital health expenditures. The findings demonstrate that the fiscal deficit, expressed as a percentage of Gross State Domestic Product (GSDP), does not have a significant or consistent impact on health expenditure in Haryana. Although there is modest evidence of a lagged adverse impact of fiscal deficit on health expenditure proportions in certain parameters, the connection lacks statistical stability. Conversely, economic size serves as the primary factor influencing health expenditure: health spending is significantly income-elastic, rising more than proportionately with GSDP. The findings indicate that public health expenditure in Haryana is predominantly shielded from short-term fiscal volatility and is primarily influenced by economic growth and institutional budgeting procedures, rather than by deficit circumstances. The study enhances the literature by offering a long-term, state-specific analysis that contests the notion that fiscal space solely dictates health expenditure results. The policy implications underscore the necessity of growth-linked income enhancement and institutional prioritisation of health, rather than dependence on deficit alleviation, to attain enduring advancements in health finance.