Is Public Health Expenditure Converging? Evidence from the North Eastern States of India

Abstract

The notion of convergence was established since the neoclassical Solow growth model (1956) which indicates that countries with similar economic features eventually drive to a steady-state. There may be an increase or a decrease in income, however, with time, the state's income will come to a steady-state, or in other words, the states will converge. Likewise, public expenditure may increase or decrease depending upon the requirement and capacity of the states; but will ultimately converge.  Unquestionably, a vast difference exists among the states and countries in terms of total expenditure and income (GSDP) given the economic potential, capacity, and requirement of the states. The north eastern states (NES), in particular, share a similar economic and social feature which is therefore anticipated that the public spending pattern among the states will be analogous. However, the results derived from the analysis were contradictory to our expectations. Methodology: Given the two prominent methods of convergence; σ- convergence and β- convergence, the study has used this method to analyze if public health expenditure among the NES is converging and that if the dispersion in public health expenditure among the NES is lowering down during the period from 1990-91 to 2015-16.  Findings: the difference in per capita health expenditure, with Mizoram at Rs 2414 and Assam with Rs 563 in the year 2015-16, has therefore made the results of σ- convergence, and β- convergence obvious. The cross-sectional dispersion in the proportion of health expenditure to GSDP is found to lower down, hence σ- convergence is observed. However, the dispersion in per capita health expenditure was found to grow with time, hence, no σ- convergence. Also, there is no β- convergence in per capita health spending however, the divergence was insignificant.