The paradox of the state of health is that health is a state subject. For anyone who reads the annual report of the Ministry of Health and Family Welfare, this may seem to be an irony because under the National Rural Health Mission, almost 70-75 percent of the funds flow from the central government to the states. Going forward, the government is aiming to increase the contribution by the states to almost 40 percent. As per the constitution, the central government stipulates the laws and much of the program implementation and delivery is by the state. Perhaps this explains to an extent why some states have shown more initiative in implementing health sector reforms against others. It is quite interesting how states are setting their own targets for the next five years to improve key health outcomes such as infant mortality rate, maternal mortality rate, total fertility rate and number of institutional deliveries. Gujarat is aiming to reduce MMR from the current 148 to 60 in the next five years.  Andhra Pradesh wants to reduce MMR from the current 134 to 70.  And for Assam, the goal is to bring it down from a high of 381 to 228.

The good news is that there states are setting their goals to improve health outcomes; the bad news is that there is wide scale disparity that exists. Even though states are setting their targets and many have shown improvement over the years, central government funding is not tied to states achieving these performance benchmarks. Since central government already funds a chunk of these programs, it could consider introducing certain categorical grants or project-based grants to the states under which states compete to grab a share of it.  Globally, this is quite common in some of the developed countries where the federal government funds some of the projects of the states based on achievement of some of the key performance indicators. One possible way is to develop an incentive mechanism through which states can be rewarded for achieving outcomes. For example, in the US, the No Child Left Behind Act is based on the federal government’s funding is conditional upon the states meeting some of the shared goals in terms of student achievement and graduation rate.

Unfortunately, political pressure many a times overrules strict enforcement of such performance incentive mechanism due to which even when states do not meet some of the goals,  they continue to get funded. As my Professor, Dr. Swiss notes, “It is fairly common for the Feds to impose certain standards on states and local governments, and to say those standards be met to get a full share of money in the future years. But it is also common for the Fed to back down, and keep the funding for the program even if those standards are not met. These waivers are mainly for political reason-Congressional members don’t want their districts to be hurt.”

While instituting a performance-based management system from the top to the lowest levels of the government may not be a complete panacea to lower disparities, in the Indian context it can do two things:

1)      Strengthening Institutions of Governance:

As funding gets tied increasingly to different levels of government meeting some performance benchmarks and being rewarded for their innovation, the upshot of this would be an increase in accountability in government and strengthening of the institutions.  “How do you explain outcomes in certain states in comparison to others? So it is institutional strengthening in some parts ( which explains this). It is no longer ( a problem of ) scare resources –it is how you utilize them and how you allocate them,” asserts political scientist, Sumit Ganguly at a seminar hosted by the Center on Democracy, Development and Rule of Law at Stanford.

2)      It will increase competition among the states for central government’s funds

If competition is good for the private sector, it will good even for governments.  And increased pressure to compete for funds for basic welfare programs such as healthcare and education, will lead to an increased focus on public policy issues within governance rather than the current parochial lens of caste and identity-based politics.  Dr. Ganguly points to the fact that identity-based politics continues to gain resonance rather than real public policy issues such as a primary health care clinic or improved primary education as they have a longer gestation period in terms of electoral gains.