90 SOCIAL SCIENTIST facts with respect to Indian health sector financing. India is characterised by high cost and low attainment in the health sector. The World Bank's country report on India places the total expenditure on health at 6 per cent of GDP which is much higher than the 3.5 per cent reported by neighbouring China. This level of expenditure in a low income country is not considered a desirable phenomenon as it points to a higher disease burden in the country.3 The relatively higher expenditure on health in India is mainly due to a higher proportion of private sector expenditure. Estimates regarding the share of the public sector vary from 22 percent to 37 percent which implies that the private sector accounts for two-thirds to three-fourths of total health expenditure incurred. It must be emphasised that this is diametrically opposite to the situation prevailing in most countries, including what are called, in World Bank terminology, established market economies. In fact, the World Development Report 1993 data clearly point out that in 1990, on an average, in the established market economies, the share of the public sector in total health expenditure was as high as 61 percent. Moreover, the world over, the trend has been for substitution of the public sector for the private sector and increasing the regulation of the private sector. In India on the other hand, the situation of the predominance of a large private sector which is virtually unregulated, is sought to be strengthened further by the current recommendations which seek to confine the public sector to preventive health and primary care. The overwhelming importance of the private sector in the provision of health services is not to be construed as an exercise of choice on the part of individuals. On the contrary, it reflects on the nonavailability of services and the poor quality of whatever services that are available. It is this factor that explains the high levels of morbidity and mortality and non-utilisation of health infrastructure built up by the government at considerable cost. Even under such circumstances, reports indicate that nearly 40 percent of all illness episodes in poor households are attended to by government doctors whereas the proportion is only 25 per cent in richer households.4 The relatively high health expenditure is likely to go up more than proportionately with rising incomes as the elasticity of health expenditure has been estimated, in the year 1983-84, to be 1.31 for urban areas and 1.45 for rural areas in the year 1983-84.5 One important fact that is relevant in this context is the high inequality of income prevailing in the country. What is more perturbing, however, is the fact that inequalities in health expenditure are even higher than that in consumption expenditure. In the year 1983-84 the Gini coefficient for consumption expenditure was 0.3229, whereas it was much higher at 0.4482 for health expenditure.6