India’s inability to improve health outcomes significantly despite rapid growth has been one of the country’s major failings. But evidence from the latest round of the National Family Health Survey (NFHS) suggests that this may be changing. The infant mortality rate (IMR), an important summary measure of a country’s health, saw a marked improvement over the past decade, declining from 57 per 1,000 live births in 2005-06 to 41 per 1,000 live births in 2015-16.

The improvement over the past decade has been much faster than in the rest of the post-liberalization era. The IMR declined at a nearly constant pace of 2.5% per annum between 1992-93 and 2005-06. But the pace of decline accelerated over the past 10 years, with the IMR registering an annual decline of 3.24% per annum.

The faster decline in IMR over the past decade cannot be attributed merely to faster growth over the latter period. Over the past decade, the effectiveness of growth in lowering IMR increased, thanks to greater public investments in health, our research suggests.

Between 1992-93 and 1998-99, and between 1998-99 and 2005-06, every percentage point of economic growth led to about 0.38 percentage point of decline in IMR. Between 2005-06 and 2015-16, every percentage point of economic growth led to 0.43 percentage point decline in the IMR.

This is a significant improvement in terms of absolute numbers of lives saved. If the effectiveness of economic growth to translate into improvements in IMR had remained the same as over the 1990s, then the all-India IMR in 2015-16 would have been 42.55 instead of 41. That would have meant 1.55 more infant deaths for every 1,000 live births, and would have translated to a total of about 40,643 more infant deaths in 2015.

This improvement in IMR has coincided with an improvement in public health spending, and the rollout of a National Rural Health Mission (NRHM) focusing on the healthcare needs of under-served rural areas in 2005. Despite leakages, the mission helped set up rural health infrastructure in areas where it was non-existent earlier, and helped raise a cadre of community health workers (ASHA workers) who worked as the frontline staff of the mission in improving health outcomes, especially of women and newborns.

All of this was enabled by increased funding. Between 2004 and 2014, public health expenditure increased from 1% to 1.4% of the GDP, a 40% increase over a decade.

In recent research published in the Journal of Development Studies, my colleagues at the University of Massachusetts Amherst, Andrew Barenberg and Ceren Soylu, and I have examined data for 31 states and Union territories in India over the period 1983-84 to 2011-12 to estimate the causal impact of public health expenditure on the IMR. We control for possible confounding factors such as state level GDP, female literacy rate, urbanization, and use exogenous variation in the fiscal capacity of states—measured by the tax revenue and non-tax revenue of states—to find the effect of public health expenditure on the IMR. Our research suggests that an increase in public health expenditure by 1% of state-level GDP leads to a decline in the IMR by about 9 deaths per 1,000 live births, even after controlling for all other factors.

These findings suggest that the decline in IMR over the past decade was caused, at least in part, by growing public expenditure on health.

The draft National Health Policy announced by the Union Cabinet earlier this year intends to take health spending to 2.5% of the GDP in a time-bound manner. Our research suggests that this should help India improve health outcomes more rapidly.

Deepankar Basu is associate professor in the Department of Economics, University of Massachusetts Amherst

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