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India’s Fiscal Devolution and Impact on Healthcare

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The health system in India is undergoing significant change, moving from a system that was heavily reliant on the central government to one that encourages decreased central control and increased decision making at the state level. The move to more decentralized operations is also accompanied by a significant increase in the transfer of untied tax funds from central to state governments. All this is consistent with a growing trend toward regional over pan Indian political power.

These changes will have important implications for state governments and for citizens in each state who seek care. The changes will require state governments in India to plan and manage resources more deliberately. States will need to decide how much of the untied funds will be allocated to health versus other sectors, and which programs within the health sector will continue. This means residents of each state may start to see changes in how healthcare is delivered and the quality of that care.

ACCESS Health International conducted a qualitative study around these recent changes. The study seeks to understand four main issues: the drivers behind the devolution process; what effect it might have on allocation of funds to health; the extent to which states will be accountable to the central government for their spending; and whether the capacity of state governments is sufficient to manage these changes. Twenty stakeholders—from the central government, from think tanks, and from three states with different socioeconomic profiles—were interviewed, and transcripts were analyzed qualitatively to identify main themes.

Click here to read the full study and an Executive Summary detailing our key findings. The study shows that while there is a good baseline capacity for managing devolution, capacity across states differs and technical assistance will be helpful for some states.

Anna Dirksen

Anna Dirksen

Anna Dirksen is Director of Communications at ACCESS Health International and leads the global communications strategy for the organization.

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