CAUSALITY BETWEEN HEALTH CARE SPENDING AND ECONOMIC GROWTH IN INDIA

Abstract

The causal relationship between health care expenditure and economic growth is a widely concerned topic in the field of Economics. Even the New Health policy of India (2017) at its very beginning acknowledges this relationship. In this paper an attempt has been made to identify the relationship between public spending on health and economic growth. Along with this main objective, an effort has also been made to have a brief review of the existing state of health care financing in India. This study employs the linear granger causality test to identify the relationship between economic growth and Public expenditure on health care in India. The result of linear granger causality in our study indicates that a unidirectional linear causality running from economic growth to Public spending on health care can be found for India. Moreover, the reports of National Health Accounts indicate the share of public expenditure in the total health care expenditure is still low in comparison to its neighbouring state; while the share of Out-Of-Pocket Expenditure has remained high over the years. According to implication of the result, although the related policies on health care expenditure would not significantly impact the economic growth but the improvements in the health systems would be still important for the improvement of the health outcomes.