Of late and with the resurgence of the market forces in countries like India, health has increasingly been considered as one of the causal factors with a decisive role in fostering growth and development (Casanovas et al. 2005). This recognition has also promoted a wider debate among health professionals and economists by linking health with individuals’ overall economic well-being and, in particular, with their poverty status. As an offshoot, this debate has led to a question: Does poor health lead to poverty or is it a symptom?

Although the health–poverty nexus and its surrounding debate has never been without its takers in India (Dreze and Sen 1995; Fuchs 2004; Behrman and Deolalikar 1988; Osmani 1992), it came to greater visibility, especially at the policy level, only after the Cairo International Conference on Population and Development (ICPD, September 1994). This recognition was reiterated further in two subsequent policy documents of the Government of India—namely, the National Population Policy (2000) and the National Health Policy (2002).

From these accounts, it may not be very implausible to infer that human health has hardly ever lacked attention in India as a broader policy concern. And yet, a number of significant issues have either missed attention, especially at micro-level, or remained on the sidelines for one or the other reason. It may, for example, be noticed that a great deal of the health infrastructure in India, especially in most rural areas, has largely been directed to achieve fertility reduction, improve contraception level and make people aware about the needs of smaller families. More recently, a few additional, but interlinked, activities have also been added with an objective to fulfil a few of the Millennium Development Goals (MDGs) such as reduction in maternal, infant and child mortality and improvement in level of institutional deliveries. In the process, however, general or post-50 health care, required by a large percentage of poor in rural and urban areas, is left to market providers—a large fraction of them consists of quacks. As poverty is still persistent in most rural areas and urban slums, reliance on private health providers is fraught with serious economic consequences, especially for low-income households engaged in the informal economy.

Another significant issue, which dissuaded analysts to examine the health–poverty nexus, especially at the micro-level, relates to lack of adequate data and information. Admittedly, the NSSO does provide data on health spending at the household level as part of its (annual and quinquennial) consumption surveys; these are generally considered reliable at the state level. The same at the district or the subdistrict level may cause problems peculiar to studies suffering from a limited number of observations. More recently, there have been attempts by the Ministry of Health and Family Welfare (MoHFW) to supplement the data sources on major health issues, particularly on access to and utilisation of health services both in the public and private sectors—most of them, however, are once again confined to reproductive health.⁴

Against this backdrop, there is now a realisation that the health situation in India is seriously entrenched in the following. First, despite its rising economy, India is still a country with widespread poverty, malnutrition and enormous disparities in almost every sphere of human life including health; women and the old suffer the most. This is particularly true for the rural areas where the per capita monthly consumption expenditure (PCMCE)—an important indicator of poverty—is alarmingly low (Alam 2008). Moreover, there is hardly any significant change in real per capita consumption level of rural households over the past decade (Alam 2008). Second, disease prevalence—both communicable and non-communicable—is invariably large among the low-income rural and urban households for poor socio-economic conditions and inadequate access to public health facilities. Third, the growing role of market in delivery of health and diagnostic services with a very high out-of-pocket (OOP) expenditure by seekers of health care, many of them, as has already been noted, at the lowest deciles of consumption levels. Fourth, the major contributory factor resulting into severity of health issues in India relates to various infrastructural bottlenecks suffered by health services provided by the centre, state or local governments. These bottlenecks go beyond the physical or financial resources and cover whole aspects of hospital administration including large-scale deployment of medical doctors to non-clinical services due to the interference of the local bureaucracy. Such deployments not only cause a considerable amount of dissatisfaction among users of public services but also force a shift to private medical services and incur OOP expenses.

Clearly, all these issues are not only detrimental to the economic well-being of a large number of poor households or their family members; they are also in direct contradiction to the National Population Policy (2000) and the National Health Policy (2002). In addition, these are in contradiction to the country’s new economic regime as well.

Three issues are often reported to have largely clouded the health indicators of the country and bring them directly in contradiction to the stated objectives of the country’s population and health policies.⁵ These are:

We will deal briefly with some of these issues in the following discussion and provide a few corroborating evidences; a few of them have already been produced by the Commission on Macroeconomics and Health in its report.

Aggregate public expenditure on health (revenue and capital) as a percentage of GDP showed a rising trend; from merely 0.40 % in 1990–1991, it increased to a little over 0.60 % in 2000–2001. It again started declining and reached to its highest level of over 0.90 % in 2008–2009 (Fig. 1.3). It remained well below the trend line during the years starting from 2002 to 2003 to 2007–2008, i.e. the years during which Indian economy risen impressively. The capital expenditure has been at a very low level; it was virtually remained almost flat below 0.1 % up to 2002–2003 and increased to its highest level at little over 0.1 % in 2008–2009. The trend of revenue expenditure has matched the general trend as the share of revenue expenditure has been very high in the total expenditure (Fig. 1.3).