Exploring the possible sources of fiscal space for health in India: insights from political regimes

Abstract

Background: Rising healthcare costs and poor access to health services have become a significant concern for policy-makers; therefore, efforts must be made to generate fiscal space through alternative revenue measures in resource-poor economies. This study attempts to identify possible sources of fiscal space for health in India across political regimes. Methods: The study followed a descriptive approach to examine the political commitment towards health sector development by estimating the trend of growth in fiscal space indicators over the political regimes from 1998–1999 to 2021–2022 using a dummy variable regression model. Results: We found four possible sources of fiscal space for health, which include (1) raising domestic revenue mobilization, (2) generating alternative revenue collection mechanisms, (3) prioritizing health through expenditure management and (4) effective utilization of central transfer. Fiscal space measures such as goods and services tax reform, collection of health-specific tax, higher excise duty on tobacco products, cooking gas subsidies to poor people, tax administration reform and direct beneficiary transfer of health services could be alternative revenue mobilization channels for fiscal space for health. Conclusion: The study reveals that the central government has a political commitment to generating revenue through various fiscal policy reforms. Health has been prioritized over the period, but there is less evidence of health-related political commitment for an increased share of health expenditure to total budgetary allocation. During the last 2 years, however, the health budget has been prioritized due to the COVID-19 pandemic crisis despite slower economic growth in India. This study will be a policy document for fiscal space analysis from a political-economic perspective, and the role of the ministry of finance can be assessed through administrative data and documents.