India’s local governments hold the key to pandemic-ready health systems, study argues

When COVID-19 arrived, India entered the crisis with one of the lowest per capita healthcare expenditures among developing nations, and a new study argues that the country’s pandemic readiness was shaped less by any single policy than by decades of fiscal choices, uneven infrastructure, and the untapped potential of its local governments. The research, published open access in Discover Global Society by Megha Jacob and Sukanya Das, uses India as a case study to trace the policy environment, public health financing patterns, and inter-state disparities in health infrastructure that formed the structural backdrop to the pandemic. Its central proposition is provocative: in a multi-tiered governance system, local government institutions, when adequately supported by higher tiers of government, may be the most efficient lever for strengthening the baseline capacity of a health system under fiscal constraints.

The fiscal picture the study paints is stark. In 2019 to 2020, the year the pandemic began globally, India’s public health expenditure stood at just 1.6 percent of GDP, lower than China at 3.2 percent, the United States at 8.5 percent, Sri Lanka at 2 percent, and Indonesia at 1.8 percent. The National Health Accounts Estimates for 2016 to 2017 revealed that the Union Government accounted for only 8.7 percent of total health expenditure, while State Governments contributed 15.8 percent and local governments a mere 0.8 percent. Households bore the largest share at 68.1 percent, primarily through out-of-pocket spending, followed by enterprises at 4.5 percent, NGOs at 1.5 percent, and external funding at 0.6 percent. These figures underscore the pivotal role that State Governments and local government institutions play in financing and delivering healthcare, and why the Finance Commission, the constitutional body recommending the distribution of tax revenues and grants across states, sits at the heart of public health service delivery.

The study traces India’s health policy trajectory back to the Bhore Committee Report of 1946, the country’s first comprehensive health policy document, which strongly recommended establishing Primary Health Centres throughout the nation to ensure universal accessible care. Yet significant expansion of PHCs occurred only after 1978. India formally adopted its first National Health Policy in 1983, aiming for universal primary healthcare by the year 2000, and before that, the Five-Year Plans treated public health largely as a subset of broader economic development goals rather than a distinct focus area. The First Five-Year Plan prioritised the BCG Vaccination Programme, National Family Planning Programme, National Malaria Control Programme, and National Water Supply and Sanitation Programme, while successive plans shifted attention through epidemic control, communicable disease, health research, primary healthcare expansion, and population control. Three National Health Policies followed, in 1983, 2002, and 2017, each reflecting the rising burden of communicable and non-communicable diseases.

The most recent policy milestone, National Health Policy 2017, was formulated with the Sustainable Development Goals in view, and its key outcome is the Ayushman Bharat Programme, comprising Health and Wellness Centres for comprehensive primary care and the Pradhan Mantri Jan Arogya Yojana, described as the world’s largest government-funded health insurance scheme, offering financial protection for secondary and tertiary care. A major earlier milestone was the National Health Mission launched in 2013, which integrated the National Rural Health Mission and the National Urban Health Mission. Over the years, the participation of local government bodies in implementing health schemes under the Mission, particularly through the rural component, has steadily increased, and Panchayati Raj Institutions now play a crucial role in monitoring and executing rural health initiatives. This growing involvement, the authors argue, is precisely why the role of local government institutions deserves deeper study.

Turning to the money, the study analysed Revised Estimates from the Ministry of Health and Family Welfare’s budget documents and the Union Budget 2020 to 2021, expressed in rupees crore, to examine how allocations across major health programmes shifted in the early stages of the pandemic. The findings reveal a decline in funding for several key programmes between 2019 and 20 and 2020 and 21, including the National Health Mission, the Rashtriya Swasthya Bima Yojana, and the National AIDS and STD Control Programme. Allocations to Autonomous Medical Institutions also decreased by approximately 5 percent. At the same time, allocations to the Pradhan Mantri Jan Arogya Yojana doubled, allocations to the Pradhan Mantri Swasthya Suraksha Yojana increased by 27 percent, and budgetary support to family welfare schemes rose by 7 percent.

The authors are careful about what these numbers can and cannot show. The increase in allocations to PM-JAY and PMSSY may be consistent with greater emphasis on health insurance coverage and strengthening treatment capacity during the early phase of the pandemic, but the two-year comparison does not by itself establish that the observed changes resulted from a deliberate shift away from long-term preventive and public health expansion towards curative or emergency-oriented programmes. Nor can budgetary data alone establish a causal relationship between these changes and India’s pandemic preparedness or health outcomes. What the figures do provide is essential context for understanding the fiscal environment in which India’s health system entered the COVID-19 crisis, one in which significant inequalities in healthcare coverage and infrastructure persisted across the country.

On infrastructure, the study draws on the NITI Aayog 2020 report to examine inter-state disparities in local public health facilities from 2005 to 2015, a period chosen to establish a structural baseline of long-term disparities rather than a direct measure of capacity immediately before the pandemic, since comparable disaggregated data for the subsequent pre-pandemic years were not available. The patterns are revealing. In 2005, West Bengal and Andhra Pradesh had the highest number of Sub-Centres, but by 2015 Rajasthan had overtaken them, while Goa, Arunachal Pradesh, Manipur, Mizoram, Meghalaya, Nagaland, and Tripura had relatively few. The average number of Primary Health Centres increased sharply between 2005 and 2010, largely due to the National Rural Health Mission, with Karnataka leading all states by 2015. For Community Health Centres, a pronounced gap exists between mainland states and the northeastern states, with Rajasthan overtaking Maharashtra and West Bengal by 2015, and Tamil Nadu experiencing a significant increase over the decade.

The authors caution that absolute facility counts alone do not provide a complete measure of health-system preparedness, because Indian states differ widely in population size, density, geographical area, rural population, and health needs. Infrastructure preparedness also depends on the availability of health personnel, equipment, beds, accessibility, service quality, referral systems, emergency readiness, and essential supplies. The indicators are therefore interpreted descriptively to identify differences in the distribution of health infrastructure across states, and are not intended to estimate the causal effect of health expenditure or infrastructure availability on pandemic preparedness or COVID-19 outcomes. Even so, the analysis provides historical context for the infrastructural conditions relevant to public health preparedness at the onset of the pandemic, and highlights the urgency of strengthening democratic governance in public health coupled with innovative monitoring and continuous evaluation of progress toward equitable outcomes.

The theoretical heart of the paper is a constrained optimisation model built on the Control Knobs Framework, jointly developed by the World Bank and the Harvard University School of Public Health, in which a policymaker can adjust five major control knobs: Regulation, Financing, Health behaviour, Payment, and Organisation. Of these five, local governments are major entities at the organisation, health behaviour, and financing levels. The model focuses on two control dimensions: investment in public health service delivery, representing the financing function, and governance improvements, representing the organisation function. The variable E denotes the financial resources and implementation effort of Local Government Institutions, while H represents the financial and administrative support provided by Higher-Tier Governments. The Health Production Function is specified as a Cobb-Douglas form, T(E,H) equals alpha times E to the power beta times H to the power one minus beta, capturing the possibility that improvements across multiple dimensions jointly contribute to health-system capacity, and implying that better regional health outcomes require collaborative effort between both tiers of government.

The model incorporates bargaining power between the tiers of government through a parameter delta, which ranges from full decentralisation, where local governments possess complete decision-making authority, to full centralisation, where control rests entirely with higher-tier governments. In practice, values lie between these extremes, representing realistic intergovernmental arrangements where authority is shared. The framework also accounts for costs on both sides: higher-tier governments face information inefficiency costs because local governments typically possess more accurate, context-specific knowledge of local health needs, while local governments face decentralisation costs such as higher prices for medical supplies due to lost bulk purchasing power and expenses for additional administrative personnel. Solving the optimisation problem yields an interior solution in which the optimal allocation of local resources, E-star, increases when the cost of providing health services declines, when the overall budget expands to enlarge fiscal space, or when local governments gain greater autonomy in decision-making. If local health services are efficient, a rise in the welfare weight assigned to local governments causes both local allocations and health outcomes to rise, while higher-tier government effort increases with better institutional efficiency, potentially through improved centre-state coordination, and with a larger budget.

The study’s conclusions are measured rather than triumphant. The theoretical model suggests that local governments, when adequately supported by higher-tier governments, may contribute to strengthening health-system capacity through more effective resource allocation across organisational and financing dimensions, but the authors stress that these findings provide a theoretical basis for considering the role of local governments and do not constitute empirical evidence of their effectiveness. The empirical component is mostly descriptive, relying on secondary data, and the model’s parameters are not estimated from observed data, so it should be considered an analytical framework for studying testable propositions rather than an empirically tested causal model. The 2005 to 2015 infrastructure data should not be interpreted as a direct measure of capacity immediately before the pandemic, and the findings should not be read as a direct quantitative measure of India’s COVID-19 preparedness. Even so, the study suggests that increasing public health expenditure, reducing disparities in health infrastructure, and strengthening institutional support for local governments may be important components of strategies to improve preparedness for future health emergencies, and calls for future research to empirically test the theoretical propositions across different institutional and governance contexts, using causal inference techniques to examine the relationship between decentralisation, local fiscal capacity, health-system preparedness, and public health outcomes.

Subject of Research: Public health financing, inter-state infrastructure disparities, and a theoretical model of local government resource allocation for health-system resilience in India

Article Title: Building public health resilience through institutional preparedness in India

Article References: Jacob, M., & Das, S. (2026). Building public health resilience through institutional preparedness in India. Discover Global Society, 4(1), Article 284. https://doi.org/10.1007/s44282-026-00639-5

Image Credits: AI Generated

DOI: 10.1007/s44282-026-00639-5

Keywords: India, COVID-19, public health, health financing, local government, decentralisation, health infrastructure, Control Knobs framework, NITI Aayog, pandemic preparedness, Building, public