Health of the people is considered highly significant for the socio-economic development of a nation. Investment on health is an investment on human resource development. Hence it is necessary to allocate adequate funds to the health sector in a planned and wise manner. To get a clear picture about the health scenario of north eastern states of India, this paper first tries to analyse the trend of public health expenditure made by both state and central government after the launch of NRHM in the year 2005. Despite the fact that health expenditure exhibits a positive trend but it is yet to reach its target of investing 2–3% of GDP. More focus is to be drawn towards the development of this sector. Therefore it becomes very important to know the relation between health expenditure and health status. Dynamic panel analysis is used and found that health expenditures and health status exhibits positive relation, health status of the people increases with increase in expenditure.
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