Health Expenditure, Health Outcomes and the Role of Decentralised Governance:Evidences from Rural India

Political scientists and health policy makers argued that outcomes of the health sector can be improved by improving the service delivery system through decentralisation in governance. But evidences on what constitutes decentralisation, how it affects health outcomes and efficacy of allocated public funds in health are lacking. This paper examines the impact of different decentralised governance measures on infant and child mortality rates of rural India across states and in improving the efficacy of rural health spending. The results show that public health spending in rural area is significant in securing better health outcomes of rural India. The efficacy of rural health spending moreover increases with the extent of decentralised governance in a state. It is noticed that states with high fiscal and political decentralisation have more significant impact in reducing the infant mortality compared to states having high fiscal but low political decentralisation, indicating efficacy of fiscal decentralisation increases with political decentralisation. The study recommend that along with allocating more public funds in rural health sector, the adequate devolution of fiscal, functions, functionaries/administrative and political powers to local bodies can be a significant step towards improving the outcomes of health sector of rural area.