Most countries in the world spend a sizable amount of public fund on health, though delivery of health services is organised through a mix of government and private providers. The countries recording high level of public spending in health have secured better health outcomes compared to the countries with low spending, barring few exceptions like the US, where high public spending co-exists with high exclusion. Some however have also managed better outcomes with little public funds while improving allocation of funds, better management and effective service delivery mechanisms (NCMH, 2005). India’s performance in improving the health outcomes, even after announcement of more than 21 committees and commissions on health sector reforms, has remained far from satisfactory levels. For instance, some of the health outcomes (infant, child and maternal mortality rates) are not only lower than the Millennium Development Goal targets but even worse than some of the developing countries. The infant mortality rates (IMR) of India is around 54 whereas Sri Lanka’s IMR is 17 (WHR, 2010). The life expectancy at birth (64 years) of an average Indian is at least 15 years lower than that of developed countries and even lower than the neighbouring Sri Lanka (74 years). Almost half of Indian children suffer from malnutrition which is even worse than what recorded in some places in Sub-Saharan Africa. More than 50 per cent of women suffer from anaemia (WHR, 2010). The rural-urban gaps in health outcomes are not only persisting but have widened over the years. In order to understand this unsatisfactory performance in the health sector, one needs to look at the gap between health policy commitments by the government and the allocation of funds in respective segments.
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