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 Table of Contents  
Year : 2012  |  Volume : 1  |  Issue : 1  |  Page : 94-104

Decentralization of health services in India: barriers and facilitating factors

1 School of Public Health, Post Graduate Institute of Medical Education & Research, Chandigarh, India
2 Department of Health, Panchkula, Haryana, India

Date of Web Publication24-May-2017

Correspondence Address:
Manmeet Kaur
School of Public Health, Post Graduate Institute of Medical Education & Research, Chandigarh
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DOI: 10.4103/2224-3151.206920

PMID: 28612783

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Background: In India, the process of decentralization of health services started taking shape in the mid-1990s. Systemic reforms envisaged delegation of administrative and financial responsibilities at district level for management of health-care institutions in 23 states of India in 1999. Subsequently, some of these reforms became part of the National Rural Health Mission (NRHM) launched in 2005. This study aims to document the process of decentralization in health services with special reference to the barriers and facilitating factors encountered during formulation and implementation of reform policies.
Methods: Secondary data were reviewed, health facilities were observed, and semi-structured interviews of the key actors involved in decentralization were carried out in Haryana (India).
Results: Political and bureaucratic commitment to reforms was found to be the most important facilitating factor. Orientation training on decentralized administrative structures and performance-based resource distribution were the other important facilitators. Structural changes in administrative procedures led to improvement in the financial management system. Significant improvement in the public health infrastructure was observed. From 2004 to 2008, the state government increased the budget of health sector by nearly 60%. Frequent changes in the top administration at the state level hampered the decentralization process. Districts having a dynamic administrative leadership implemented decentralization more effectively than the rest.
Conclusions: Decentralization of financial resources has improved the functioning of health services to some extent. Major policy decisions on decentralization of human resource management, increase in financial allocation, and greater involvement of community in decision-making are required.

Keywords: Health services, policy, programme, qualitative, decentralization, management

How to cite this article:
Kaur M, Prinja S, Singh PK, Kumar R. Decentralization of health services in India: barriers and facilitating factors. WHO South-East Asia J Public Health 2012;1:94-104

How to cite this URL:
Kaur M, Prinja S, Singh PK, Kumar R. Decentralization of health services in India: barriers and facilitating factors. WHO South-East Asia J Public Health [serial online] 2012 [cited 2021 Dec 7];1:94-104. Available from: http://www.who-seajph.org/text.asp?2012/1/1/94/206920

  Introduction Top

India is a vast country having the second largest population in the world. It comprises of 28 states and 7 union territories.[1] Though decentralization of finances and functions started way back in the 19th century,[2] it was the 73rd Amendment to the Constitution of India (1992) that brought decentralization to the forefront.

In India, health services are organized and financed by state governments as the Constitution of India affirms health as a state subject. Few subjects such as international health and epidemic control, etc. are dealt with by the Government of India. Hence, several national health and family welfare programmes are planned and financed by the Central Government but are implemented by the state governments.

Centralized planning and operational controls had been a major area of concern in India as it had led to poor demand and inadequate supply of health services. Most patients consult private practitioners rather than government health services.[3] Therefore, National Population Policy (2000) and Health Policy (2002) emphasized the importance of decentralization. The process of decentralization started taking shape with the National Reproductive and Child Health Programme after the International Conference on Population Development. However, a sector-wide approach was adopted only in the late 1990s when 23 state governments initiated the Health Sector Investment Programme.[4] Health service reform envisaged decentralization of administrative and financial functions from the central/state level to the district/subdistrict level and also to the peripheral health institution level.

We have studied the process of decentralization in health services with the focus on understanding the barriers and facilitating factors in Haryana state. Haryana, located in northern India, had a population of 21 million in 2001. The per capita gross domestic product in this state is one of the highest in India. However, health indicators place this state in the middle range of performance.[5] The governance systems in Haryana state are similar to many other states of India, i.e. elected legislative bodies and executive structures exist at state, district, subdivision, city/town and village level respectively.

Health service reforms

Brainstorming workshops were held during 1999 to identify the problems and solutions. All stakeholders, i.e. state-and district-level senior government officers from general administration, health service, rural development, social welfare, education department and non-governmental organizations participated in these workshops. Based on the recommendations, State Action Plans were conceived. These plans were discussed at the State Health Sector Reform Cell, which was created to review the progress and to troubleshoot any emerging problem. District Action Plans were prepared following the participatory planning approach. In these plans, panchayati raj institutions (a three-tier structure of elected bodies at village, subdivision and district level) were to be made responsible for the functioning of most peripheral health institutions, i.e. subhealth centres in rural areas. This initiative has been documented as one of the best practices in the Policy Reform Database.[6] The Haryana State Sector Reform Cell recommended several policy initiatives [Box 1].

The administrative and financial powers of district and subdistrict health authorities of health department were revised in the year 2000. Learning from experiences of three pilot districts where reforms were initiated in 1999, state government started making concerted efforts to direct the decentralization and devolution process throughout the state in 2003. Several “societies” that were established earlier for various centrally-sponsored national health programmes were merged into one District Health Society. The exercise of capacity building of staff on decentralization was completed in all districts of the state by 2005.

Newly created health societies* at the state and district levels adopted a performance-linked financing model. Persons were nominated for membership of such societies from a wide range of health and related sectors and institutions, i.e. from government and nongovernmental organizations and professional associations. Health societies were registered under an existing law[7] that permitted them to have their own constitution, governance structure, rules and regulations. The chairmen of governing councils of societies were generally the chief administrative officers from the general administrative service of the government, while the chairman of executive council of the society was head of the government health service unit at state or district level. The conventional line administration of health services (Director, Health Services - Chief Medical Officer- Senior Medical Officer- Medical Officers) also continued to be the primary vehicle for implementation of action plans designed by health societies at state and district levels. The commitment of the State Health Secretary and Director, Health Services led to the strengthening of “health societies” through installation of modern computing systems and appointment of additional secretarial and technical staff for “societies”.

Training of medical officers on decentra-lization and government orders on retaining and utilizing the “user fee” encouraged utilization of funds that were being transferred by the Government of India to district health societies. Training of district staff involved in account-keeping within the society structure further facilitated fund utilization.

To enhance accountability, a Memorandum of Understanding (MoU) between the Government of India and state governments, and the European Delegation was prepared in 2002, which was signed in August 2003. The MoU dealt with an agreed upon reform programme, spending plan and milestones, state action plans and district action plans, the major emphasis being on policy changes and on performance-linked financing. The National Rural Health Mission (NRHM) launched by Government of India in 2005 further strengthened the decentralization structures and local-level planning.

  Methods Top

An historical method was used for mapping the policy-to-practice timelines. The agenda and proceedings of the State Reform Advisory Committee and State Health and Family Welfare Sector Reform Cell meetings were reviewed systematically. Besides government documents, newspaper commentaries pertaining to decentralization policies and programmes were also reviewed. The observations made by an evaluation consultant[3] and presentations made by state health service staff, at various public forums and administrative review meetings held during 2003 to 2007, were used to strengthen the information base.

Routine data from state health information system was obtained for assessment of changes in health service utilization. Quasi-participant observations were made by two investigators for understanding the process of decision-making at various administrative levels, i.e. at state, district and health institution level in the Haryana state.
Table 1: Timeline for decentralization of Haryana State Health Services

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The District Health Society was evaluated in a pilot district by interviewing its chairman and two members of the governing board/executive council; one of them was a local community leader and the other was representing a professional organization of doctors. Semi-structured pre-tested interview schedules were used for conducting interviews. The level of community participation, i.e. involvement of community leaders in decision-making, was assessed by their attendance at meetings of district health society and the extent of information sharing between the members of the district health society’s governing board/executive council and the general community. The effectiveness of health institution-level committees named swasthya kalyan samiti (health welfare societies), in implementing reforms, generating resources and improving the quality of services by utilizing revenue collected locally, was ascertained by interviewing the chairperson and two randomly selected members of these societies who represented nongovernmental organizations and panchayti raj institutions (elected bodies in the rural areas).

We used the theoretical framework of policy analysis proposed by Gill Walt[8] and the “decision space” framework suggested by Bossert et al.[9] The Gill Walt theoretical framework of policy analysis relates to the role played by different players, while the “decision space” model has been used to identify the range of choices for performing the functions decentralized by the centre/state to the district and health institution level.

  Results Top

The policy changes for decentralization resulted in enhancing discretion or creation of “decision space” for the district and sub-district level administrators of Healthcare Institutions/ Organizations through the creation of semi-government bodies, i.e. ‘Health Societies’.

The implementation of state action plans and district action plans was quite slow during 2001-2002. Only about 26% of the allocated financial grant was spent in Haryana. The implementation status was similar across all 23 states of India. A change in the top administration of Haryana State in 2003 led to changes in the action plan despite the existence of a signed MoU.

Facilitating factors

The review of minutes of governing body meetings at district level revealed that the major reason for better performance was active involvement and leadership of the Deputy Commissioner (top district bureaucrat) in the “health society” as its Chairman. He/she introduced regular programme review meetings that led to strengthening of intersectoral coordination, especially regarding the repair and maintenance of buildings by other government departments. Financial grants had been released to “societies” as per their need to carry out repair and maintenance of buildings. These grants were found to have been utilized to a large extent.
Table 2: “Decision space” for delegated powers in Yamuna Nagar District of Haryana State, India

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In most states, decentralization led to a visible improvement in the physical condition of hospital/health centre buildings especially in district hospitals. Health service providers reported improvements in the range and quality of services due to provision of adequate equipment in operation theatre, construction of new operation theatres and new maternity wards (6-bed and 12-bed wards in subdistrict hospitals), provision of clean linen, blankets and furniture for patients, provision of continuous supply of laboratory reagents and chemicals at all levels of health-care institutions, minor repairs of buildings, purchase of electricity generators and batteries to maintain continuous electricity supply and improvement in the cleanliness of health institutions. These changes improved the visibility and look of health-care institutions. The outpatient attendance increased by 35% even in romote districts.[10] The rate of child births in government health facilities started going up in 2004; it increased by 20% by 2006. Based on the encouraging performance of the health sector, the state government increased its annual budget for the year 2005-2006 by 60%, i.e. from 450 to 750 million Indian rupees.

Delegation of powers related to human resource management such as the placement policy for ensuring availability of specialist medical and surgical services at first-level referral units, policy on essential drugs list and generic medicines, and standard treatment guidelines improved the utilization of outpatient and inpatient services during 2004-2005. All stakeholders at the district and health institution level reported that the financial resources available to health societies and the administrative and financial powers delegated to them were sufficient. It was felt that a trained accountant was needed since administrators at subdistrict level had difficulty in handling the accounts. Medical officers at health centres suggested that a system of internal audit should be set up for ensuring procedural correctness of financial transactions at institution level. This would make the Chairman of the “Health Society” more confident.

The National Rural Health Mission (NRHM) launched by the Government of India in 2005 further strengthened decentralization structures and initiated local-level planning. The management units of “health societies” at state and district levels were strengthened with financial support from the NRHM. Introduction of a financial management manual, training of all concerned on financial management, and placement of a Chartered Accountant strengthened the decentralization process as it increased the use of delegated powers.


However, many of the initiatives such as computerization of the management information system related to drugs could not be sustained. Interviews with stakeholders revealed that although the power of appointing staff on contract and disbursement of their salaries was vested with the Chairman of district health societies, except for the appointment of the lowest category of staff, no other category of staff could be appointed as state government rules permitted appointments of staff only through a private agency/ nongovernmental organization intermediary. These agencies were not available in districts. Hence, despite the severe shortage, specialist doctors, general duty doctors and accountants could not be recruited.
Table 3: Haryana health service decentralization: facilitating factors and barriers

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The decentralized “society” structures could involve panchayati raj institutions in their governing councils but could not make them responsible for managing the functioning of sub-health centres. However, decentralization provided implementers at the district an opportunity to innovate. District health societies could initiate public-private partnerships to extend services to the urban poor.

Lack of sufficient financial flexibility in recruiting medical officers and specialist doctors was cited as a problem because the level of salary specified by the government for contracting out doctors was much less than the prevailing market rates. Another difficulty encountered by the “societies” at health institution level was their inability to purchase routine drugs since government rules permitted purchase of only emergency drugs. Shortage of drug supply at health centres remained an unresolved issue.

The period from late 2004 and early 2005 was of political and bureaucratic change at the top in most states. It became increasingly difficult to sustain the changes that had been made in the immediate past. At one of the meetings it was discussed that all reforms should be reversed. The situation stabilized by late 2005. An amendment was made to the State Treasury Rules in 2007 for direct appropriation of “user fee” at institutional level by “health societies”.

  Discussion Top

Issues related to the dichotomy of administrative roles and financial resources between the Centre and the states are well recognized in India.[11] Until 1994, the Ministry of Health and Family Welfare, Government of India had a major role in decision-making related to the National Family Welfare and Disease Control Programmes especially in setting targets. Funds transfer from the Centre to the state treasury often resulted in delay and or diversion of resources to other pressing needs. Hence, the Central Government required that states should register a “society” named the State Committee on Voluntary Action (SCOVA) in 1997 for receiving Central Government grants. The administrative and financial powers devolved upon SCOVA could not be used as there was resistance to change; implementation plans could not be prepared and funds were poorly managed.[8] The creation of “health society” structure and linking the transfer of funds to state and district health societies with action plans ensured that the funds meant for implementation of action plans were utilized only for health programmes. Various innovations/best practices emerged as states had the power and resources to do so during the transition phase from centralization to decentralization.[11]

Gill Walt (1994) emphasized the role of actors and the context in policy change. The change process required decentralization that took shape only when the technical consultant advocated the need for a policy on decentralization to the State Health Secretary and Director-General of Health Services and district health officers. It was a tough task as delegation of powers called for “shared” responsibility at all levels. However, as most states were facing financial pressure during the 1990s, reforms in the hour of crisis provided an opportunity for “defining priorities, refining the policies, and reforming the institutions through which policies are implemented”.[12] Therefore, the state government signed an MoU to augment the fund flow for which the state was required to have a decentralized structure – “health societies” for planning and monitoring the health programmes.

The implementation of decentralization had a principal-agent relationship between the European Commission (principal) and the Government of India (agent). A similar relationship existed between the Government of India and the state government on the one hand and between the state government and district health administration on the other hand. District action plans were a kind of MoU between the state and districts, which defined the relationship among these agencies. Performance-based funding between the Government of India and the state on accomplishment of certain reforms and expenditure targets was the major catalyst of change. Similarly, the District Action Plan embodied “a relational contract” and not a “hard contract”, which decided how and in what direction the agent, i.e. district health societies will move. The bureaucratic and political interests of retaining the powers conferred on them have acted pervasively against the interests of the principals, as is reflected by the comment made by one of the top bureaucrats on decentralization plans: “Oh, now I understand that you want to bring the government down to the district level!”

Performance-based funding can be an incentive to service providers but it needs to be viewed in the larger context of health reform, i.e. equity, efficiency, quality and financial soundness.[6],[13] It needs to be designed as a political reform to increase the local autonomy and reduce the extent of federal control.[14] Decentralization may not envisage improvement in health services but may bring changes in the authority and financial responsibility for health services. This case study of Haryana state shows that despite the pressure of performance-linked funding all districts did not perform equally. The ownership and financial management capacity of local agencies have been questioned across the globe including East Asian countries like China, Indonesia, the Philippines, Thailand and Viet Nam.[15]

It has been argued that free health services encourage inefficient overuse of allocations. And “user charges” may exclude the poor from availing health care. Reforms in India have exempted poor patients (living below the poverty line) from “user charges”. Physicians and medical superintendents/ senior medical officers could exempt the poor patients from “user charge” by not insisting on their possessing a documentary proof of poverty. They could use their judgement to decide who should pay “user charge”.

Though health reforms did envisage making health institutions “autonomous”, but their ownership was not transferred to the newly-created institutional bodies, i.e. health societies. Local elected bodies (panchayati raj institutions or municipal committees) were also not fully involved in their planning and monitoring in most states. Only the states of Kerala, Gujarat and Maharashtra were able to involve locally elected bodies in planning. These bodies were also empowered financially to some extent. Decentralization in Indonesia was more radical where over 16 000 public service facilities were handed over to regions, and a brand new inter-governmental fiscal system was put in place.[16]

To realize the full potential of decentralization, the “resistance” in sharing power and resources (on the part of state-level politicians and bureaucrats) with the district-and subdistrict-level politicians and administrators needs to be addressed. There is reluctance or lack of political will in district and subdistrict- level governing bodies to take over or manage health institutions because of their inadequate capacity/experience. Capability building of local bodies is required; otherwise the decentralization efforts in respect of health services may get reversed soon.

Health services in India need greater decentralized planning, and better managerial and monitoring systems. Financing of decentralized health services should be the responsibility of the Central and state governments as most of the revenue generated through tax is at these levels. The local government at city, village, subdistrict or district level does not have an adequate financial resource base. The technical aspects of service delivery may be the responsibility of health professionals but the planning, organizing, budgeting and monitoring functions should rest with the elected representatives of the local government at district level who can have technical support from health societies. Technical guidelines and policies could be formulated at the Central or state level for maintaining technical standards. More research using a mix of methods (quantitative and qualitative) involving the end users of health services is also required for monitoring the effects of decentralization as State-sponsored policies and interventions may not be more effective in promoting development.[17]

Though members of “health societies” were largely nominated from among the stakeholders to encourage intersectoral coordination, their nominations were generally driven by general administrators in consultation with health administrators. The governing bodies at local level, i.e. municipal committees in urban areas and panchayati raj institutions in villages, members of which are elected by people, did not have a decisive role in the working of a “health society”. Health societies require a strong secretariat supported by professional managers, accountants and auditors, etc. It is essential to address the constraints in institutionalizing locally elected bodies through both macro and micro structural changes.[18] Decentralization can lead to cost-effective, humane and accountable health service only with political commitment, legislative framework, financial decentralization and resource mobilization, management capacity and community participation.[19] A more thoughtful groundwork for decentralization is necessary before a broadened participation and empowerment of community can be attained. Translating the policy of decentralization into action may be more successful through the action research mode.[14]

To conclude, decentralization has improved the functioning of health services to some extent in India. Political and bureaucratic commitment to reforms was found to be the most important facilitating factor. Orientation training and performance-based resource distribution were the other important facilitators. Structural changes led to improvement in the financial management system. Also, significant improvements in the public health infrastructure have been observed. Frequent changes in the top administration at the state level hampered the decentralization process. Districts having a dynamic administrative leadership implemented decentralization more effectively than the rest. Major policy decisions covering decentralization of human resource management, increase in financial allocation and greater involvement of the community in decision making need to be taken. At present only about 1.1% of GDP is spent on health by the Central and state governments,[20] large number of vacant positions exist in various health institutions,[21] and decision- making still happens mostly at Central and state government level. There is no quick recipe to decentralization but a visionary political leadership, in combination with a strategic focus of bureaucrats working in the public health system having good technical capacities, is needed so that the technical, social, cultural, professional and political aspects of decentralization are managed properly.

  References Top

Sury MM. Centre - State financial relations in India - 1870 to 2010: 140 years of Indian Federal Finance. New Delhi: New Century Publication, 2008.  Back to cited text no. 2
National Sample Survey Organisation. Morbidity and treatment of ailments in India – 1995-1996. National Sample Survey. 52nd. New Delhi: Department of Statistics, Government of India, 1998.  Back to cited text no. 3
Government of India & European Commission. Situational analysis on reform initiatives under state health systems projects: part - 2 (AP, Karnataka, Punjab and West Bengal). ECTA Situational Analysis 2001/26. New Delhi: Health and Family Welfare Sector, 2001.  Back to cited text no. 4
Registrar General. Sample registration system, India. SRS Bulletin. 2011; 45(1).  Back to cited text no. 5
Government of India, Ministry of Health and Family Welfare. Health sector-policy reform options database. New Dehli: Central Bureau of Health Intelligence (CBHI), Directorate General of Health Services, 2005. http://cbhi-hsprod.nic.in/links.htm - accessed 4 January 2012.  Back to cited text no. 6
Government of India. Societies Registration Act, 1860. http://uprfsc.up.nic.in/India%20Societies%20 Registration%20Act.pdf - accessed 10 January 2012.  Back to cited text no. 7
Walt G. Health policy: an introduction to process and power. Zed Books Limited, 1994. http://ccp.ucr.ac.cr/ cursos/decisiones/contenido/lecturas.html - accessed 4 January 2012.  Back to cited text no. 8
Bossert T. Analyzing the decentralization of health systems in developing countries: decision space, innovation and performance. Social Science & Medicine. 1998; 46(10): 1513-27.  Back to cited text no. 9
National Institute of Health and Family Welfare. Study on functioning of Health & Family Welfare Societies in Haryana. Report. New Delhi: NIHFW, 2007.  Back to cited text no. 10
Health sector reforms in India, Initiatives from States-II. New Delhi: Ministry of Health and Family Welfare / World Health Organisation, Country Office for India, 2007.  Back to cited text no. 11
Cassel A. Health sector reform: Issues in less developed countries. Discussion paper 1. Secretariat: National Systems and Policies Unit. Division of strengthening health services. Geneva: World Health Organisation, 1995. http://whqlibdoc.who. int/hq/1995/WHO_SHS_NHP_95.4.pdf - accessed 4 January 2012.  Back to cited text no. 12
World Bank. Overview of rural decentralisation in India Vol. I; 2000. http://www1.worldbank. org/publicsector/civilservice/june2004seminar/ RuralDecent.pdf - accessed 4 January 2012.  Back to cited text no. 13
Burnes B. Kurt Lewin and the planned aproach to change: a re-appraisal. Journal of Management Studies. 2004; 41(6): 971-1002. http:// hattonconcepts.com/media/papers/leadership/ Burnes%20on%20Lewin%20and%20planned%20 change.pdf - accessed 4 January 2012.  Back to cited text no. 14
East Asia decentralizes: making local government work. Washington D.C.: World Bank, 2005. http://siteresources.worldbank.org/INTEAPDECEN/ Resources/dc-full-report.pdf - accessed 4 January 2012.  Back to cited text no. 15
Turner M, Hulme D. Governance, administration a development: making the state work. London: Macmillan, 1997.  Back to cited text no. 17
United Nations Development Programme. Decentralisation in India: challenges & opportunities. New Delhi: UNDP, 2005. http://data.undp.org.in/ hdrc/dis-srs/Challenges/DecentralisationCO.pdf - accessed 4 January 2012.  Back to cited text no. 18
World Health Organization, Regional Office for South-East Asia. Management of decentralization of health care. New Delhi: WHO-SEARO, 2002.  Back to cited text no. 19
Government of India. National health accounts 2004-2005. New Delhi: Ministry of Health and Family Welfare, 2009.  Back to cited text no. 20
Government of India. District level household and facility survey. International Institute of Population Sciences. 2007-08. http://www.rchiips.org/PRCH-3. html - accessed 4 January 2012.  Back to cited text no. 21


  [Table 1], [Table 2], [Table 3]

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