Podcast Summary: Fiscal Transfers for Better Health

Podcast: The CGD Podcast
Host: Rajesh Merchandani
Guests: Amanda Glassman and Anit Mukherjee (Center for Global Development)
Episode Date: December 8, 2015
Report Discussed: Power to the States: Making Fiscal Transfers Work for Better Health

Episode Overview

This episode explores the pivotal role of fiscal transfers in improving health outcomes in India and other developing countries, focusing on the shift in fiscal policy that allocates a greater share of tax revenue from central to state governments. The discussion highlights why stronger, smarter, and more accountable state-level spending is crucial for health improvements, and draws insights from CGD’s new report. Amanda Glassman and Anit Mukherjee guide listeners through the policy challenges, recent changes, and targeted recommendations for achieving better health through better fiscal policy.

Key Discussion Points & Insights

The Significance of Subnational Spending in Health

• Majority of Health Funding is Subnational:
  • Amanda Glassman opens by emphasizing the shift of fiscal and decision-making power from national to subnational governments, both in India and elsewhere.

    “Most money and responsibility for health in many countries rests with subnational governments.” (03:43)

  • However, international institutions and donors mainly engage with national governments, resulting in a disconnect and insufficient focus on state-level outcomes.
• Lack of Accountability and Data:
  • Subnational administrators control the budgets, but there’s little accountability or tracking of how money is spent and what outcomes are achieved.

    “No one knows if that mattered for those hospitals and the services that they provide. No one was tracking the money, no one was tracking the production of services.” – Amanda Glassman (03:45)

India's 2015 Fiscal Reform: More Money to States

• The Change in Tax Devolution:
  • Anit Mukherjee details how India increased the percentage of federal tax revenue devolved to states from 32% to 42% in 2015—a major structural shift.

    “The amount of money...going to the states from the center’s tax collection has increased by 10%...This will go on the basis of a formula…poorer states…get extra funds which are untied.” – Anit Mukherjee (04:56)

• Implications:
  • Untied funds allow states greater discretion, acknowledging India’s size and diversity.
  • The central government must rethink its role, focusing less on prescribing inputs and more on creating incentives and performance milestones.

Challenges in Achieving Better Health Outcomes

• Mixed Outcomes Despite Rising Budgets:
  • Economic growth and direct cash transfer programs have led to tangible progress—like a dramatic reduction in home births—but public health facility utilization has not improved proportionally.
  • People, including the poor, often favor private health providers due to erratic public sector delivery.

    “Public health system delivery in India is very erratic…even poorer people, they seek care from the private providers.” – Anit Mukherjee (10:08)

• States Have Different Needs:
  • Large states (e.g., Bihar: 100 million people) have unique priorities. A uniform, centrally dictated approach is unworkable, reinforcing the need for local autonomy in spending.

Recommendations from the CGD Report

1. Central Funds Should Incentivize National Priorities:
   • Instead of controlling inputs, the center should reward states for achieving specific outcomes, e.g., reductions in infant mortality, improvements in immunization, or availability of essential medicines.

     “Our suggestion is: don’t get lost in the weeds. Focus on the big issues…For example, Prime Minister Modi is interested in a free medicines program.” – Amanda Glassman (11:28)

2. Smarter, More Targeted Spending:
   • Funds should be directed to priority health needs based on local conditions and data, not top-down mandates.
3. Measurement, Evaluation, and Accountability:
   • Accurate data and independent verification are essential for effective, performance-based transfers. Outdated census data can distort resource allocation.

     “Getting the numbers right really matters and having some kind of independent verification of that also really matters.” – Amanda Glassman (15:44)

Global & National Implications

• India as a Global Model:
  • Success in India, which accounts for a fifth of the global disease burden, can drive massive health gains and set the standard for other countries managing fiscal decentralization.

    “Imagine if they do get it right...in the entire country. Could really be a game changer.” – Amanda Glassman (17:19)

Notable Quotes & Memorable Moments

• On the Disconnect Between Fiscal & Health Experts:

  “The fiscal people have not been very engaged in the health sector and likewise the health people have not really engaged in fiscal policy.” – Amanda Glassman (01:59)

• On the Scale of Indian States:

  “The state of Rajasthan is like 20 Canada…You cannot imagine prescribing a single intervention modality for such a large population.” – Amanda Glassman (06:16)

• On the Need for Better Data:

  “If you’re going to have the number of kids actually vaccinated on top of what you think the universe of kids is...You’re actually going to be paying too much to people who shouldn’t have gotten it...” – Amanda Glassman (15:44)

• On Broader Development Goals:

  “India is growing as the fastest growing economy…Now we need a much broader and a much better vision of where our health system needs to be, because this…will determine India’s productivity, India’s capacity to innovate and capacity for a healthy workforce.” – Anit Mukherjee (16:15)

Timestamps for Key Segments

• Introduction & Importance of Subnational Health Spending – 00:05-04:40
• India’s Fiscal Decentralization Shift – 04:40-06:30
• State Budgets vs. Central Role in Health – 06:30-08:20
• Progress and Persistent Challenges in Health – 08:20-10:00
• Public vs. Private Utilization & State Differences – 10:00-12:00
• Report Recommendations Discussion – 12:00-16:15
• India’s Global Influence & Concluding Thoughts – 16:15-17:34

Conclusion

The episode persuasively argues that empowering subnational governments and aligning fiscal transfers with measurable national health priorities can dramatically improve public health—provided there is robust accountability and data-driven policy. India’s experience and reforms provide lessons with global resonance for countries managing decentralization and seeking to maximize health returns on public spending.

For further details, read the full report: "Power to the States: Making Fiscal Transfers Work for Better Health" at cgdev.org.