Inequality in Public Provision of Healthcare: Do Fiscal Transfers Matter?

Abstract

In this paper, we investigate the inequality in the public provision of healthcare in India and assess whether states are converging over time. We locate the equalization of public provision within the framework of fiscal federalism. Departing from previous work, we gauge disparity in public provision by scrutinizing the provision in terms of primary and community health centers. The $\beta$ and $\sigma$ convergence analysis indicate no substantial reduction in inter-state disparities, raising concerns regarding the attainment of universal healthcare access. In addition, the club convergence analysis identifies states converging into multiple clubs in the public provision of health centers, indicating the persistence of inter-state disparity. The panel regression estimates indicate the prominence of own revenue over fiscal transfers in determining the public provision of healthcare. The findings underscore the necessity of reforms in fiscal devolution, with a particular emphasis on tax devolution and revamping sector-specific grants to achieve national targets. The present paper contributes to a long-standing debate on unconditional versus conditional transfers for public provision.