Fiscal Instruments for Health in India

Authors: Amit Summan, Nicholas Stacey, Karen J. Hofman, Ramanan Laxminarayan


Despite recognition that social determinants of health including environmental factors (air and water quality), behavioral factors (access to and use of toilets, soap and condoms, and health diets) exercise at least great an  influence on population health in developing countries as direct interventions within the health sector, there has been little understanding of how existing fiscal policy instruments available to governments in low- and middle-income countries can be leveraged to improve health. In this paper, we set out a basic framework for assessing the appropriate role, benefits and costs of tax, tariff and subsidy policy changes that have the greatest potential to improve health while minimizing the cost to economies.  The framework takes into consideration the welfare consequences associated with distortions caused by the policy, direct and indirect health benefits of the policy and the benefits of the policy in correcting externalities.