Nexus between Health Expenditure and Economic Growth: Evidence from Panel Data in India from 1991-2021

The health sector has become the most crucial sector of concern. The performance of health indicators in almost all fronts of the country is lagging compared to other surrounding nations. Government health expenditure is essential for providing health facilities, resulting in better health outcomes. The present study examines the causality between health expenditure and GSDP in 15 major states 1991-2021(30 years). The sources of data collected from -The Reserve Bank of India (RBI) – "State Finances: A Study of Budgets", World Bank Database by using the panel econometrics tools and it found that economic growth (GSDP) homogeneously causes health expenditure and vice-versa. This study suggested that the government to include investment in health as a tool of macroeconomic policy because differences in economic growth rates between countries have been significantly explained by health differences, showing that investment in health improves economic growth. In conclusion, the present research provides comprehensive evidence of the significant relationship between health expenditure and economic growth in major states in India.