Efficiency of Raising Health Outcomes in the Indian States

As health is a state subject and merit good, the state Governments in India spend increased amounts on it. However, the health outcomes vary across the states. This study measures the efficiency of Indian states in raising health outcomes, using the stochastic frontier methodology for panel data for the period 2000-2009. The average efficiency is estimated at 72.7 per cent, implying that there is a scope for improving health performances, without additional resources. In 7 out of 17 states, the efficiency is below the average efficiency. These states can improve their performance significantly by following the best practices. The results also indicate that the states can improve their health performance by increasing their expenditure on health, providing more medical doctors/specialists, educating people and create health awareness.