Efficiency of social sector expenditure in India: a case of health and education in selected Indian states

Abstract

Social sector expenditure in India captures a number of important aspects including health, nutrition, education, water supply, sanitation, housing and welfare, among others. Over a period of time, besides budgetary outlay on this sector, private sector has also played a considerable role. Thus, efficiency of expenditure in this sector by state government has to be reckoned both in terms of relative levels of various aspects across the states and in terms of comparable benchmarks for different aspects of the sector. This paper attempts an analysis of social sector efficiency focusing on two major aspects: health and education. Unlike other studies on the Indian context, this analysis focusing on major states in India uses both non-parametric and parametric approaches. Although both approaches provide benchmarks to judge relative efficiency across states, the former provides a yardstick more at an aggregative level without parametric restrictions, whereas the latter is used for major focus on health care aspects. Results of free disposal hull analysis are suggestive of a considerably more scope for improvement in efficiency of public expenditure in health relative to education. Our results of stochastic frontier analysis indicate considerable state level disparities which could be reduced through a mix of strategies involving reallocation of factors (namely, manpower and supply of consumables) within the sector, mobilizing additional resources possibly through enhanced budgetary emphasis, or encouraging more private sector participation. Based on our results, this may enhance efficiency by nearly 20% in health care sector and increase availability and equity across low performing and poorer states like Madhya Pradesh and Uttar Pradesh.

Analysing the Efficiency of Health Systems: A Systematic Review of the Literature

“…Seventy-two (57%) of the publications that used pure quantitative approaches or mixed methods used cross-sectional quantitative data to estimate the level of efficiency in the health system. The remaining 54 (43%) of these papers used panel data with authors such as [27,50,51] indicating that panel data offer more accurate estimations of efficiency because of the richness of the data and consideration of the effect of time [52] precludes the need to impose assumptions on the error terms likely to be correlated with time. Of the papers that used panel data, 36 (67%) used the Malmquist productivity index (MPI) approach to measure efficiency changes over time, while 18 (33%) included time as a covariate in a regression analysis.…”

Analysing the Efficiency of National and Sub-national health systems - A Systematic Review of Literature

“…72 (57%) of the publications that used pure quantitative approaches or mixed methods used cross-sectional quantitative data to estimate the level of e ciency in the health system. The remaining 54 (43%) of these papers used panel data with authors such as [50], [51] and [27] indicating that panel data offer more accurate estimations of e ciency because of the richness of the data and consideration of the effect of time [52] precludes the need to impose assumptions on the error terms likely to be correlated with time. Of the papers that used panel data, 36(67%) used the Malmquist productivity index (MPI) approach to measure e ciency changes over time, while 18 (33%) included time as a covariate in a regression analysis.…”

Efficiency of subnational government expenditure towards elementary education and nutrition: Bootstrap data envelopment analysis for India

“…What causes this variation in the efficiency scores across states and over time? While attempting to answer such questions on the difference of TE across states, Purohit (2014) highlighted the role of education and health inputs which differ across states as well as State-specific deficiencies in the planning and administration that lead to poor utilisation of the available inputs. In the present analysis, we assess the impact of governance level in the State as well as the role of federal fiscal transfers on efficiency scores.…”