Public Expenditure on Health and Economic Growth in Selected Indian States

Even though, there are number of theories on the relationship between government expenditure and economic development; the two approaches, viz., the Wagnerian and Keynesian approaches have received more attention. This paper examines the casual relationship between health care expenditure and economic growth on the four states based on an annual data series from the period 1991 to 2010. The necessary information collected from various sources were analyzed. It is confirmed that the health expenditure and economic growth are co-integrated in all the four Indian states. Hence, these results revealed that there exists a unidirectional causality from health expenditure to economic growth in all four states.