Fiscal federalism, inter-governmental transfers and public health– The case of Urban Local Bodies in India

Public policy in India has historically ignored the potential of urban local bodies (ULBs), a constitutionally mandated third tier of Government, in addressing urban health issues. Constituted against the backdrop of an overwhelming pandemic, the Fifteenth Finance Commission (FFC) of India went beyond its conventional domain of recommending revenue sharing principles across different levels of Government, to make certain novel financial recommendations around decentralized provision of health services. This paper critically analyses the context, nature and scope of FFC recommendations for health to ULBs. In the process, the paper engages with diverse, yet connected themes like evolution of urban health policy in India, constitutional status and current fiscal situation of ULBs, their role in health service delivery, nature and composition of FFC grants for health and their status of implementation. A re-categorisation of FFC grants guided by a comprehensive understanding of health, shows that the grants are well designed to address the persistent, escalating as well as emerging public health problems of a rapidly urbanizing nation. Moreover, composition of these grants displays a clear emphasis on delivery of public health and primary health care services by local bodies - the tier of Government which is closest to its constituency. However, data from the first three years of the FFC period demonstrates inconsistencies in allocation, release and actual spending of health grants, which is likely to impact the realisation of its stated objectives.