WORLD DEVELOPMENT REPORT, 1993, STRUCTURAL ADJUSTMENT 91 It is in this situation of high expenditure, an exceptionally large role for the private sector, the large inequalities in income as well as health expenditure and poor quality of services provided by the public sector that health sector reforms are being suggested. That these are to be implemented in a situation when the country is undergoing a structural adjustment programme makes them all the more significant. Ill The series of measures being implemented in the economy, with IMF-World Bank assistance, have affected Union Government finances. There seem to be two distinct phases in the response of the Union Government. First, comprising the first two years of adjustment when the government was seriously concerned with reducing the fiscal deficit, and second, the subsequent two years when fiscal discipline was lax. Thus, during the first two years the fiscal deficit declined sharply from 8.4 percent in 1991-92 to 5.7 percent in 1992-93. In 1993-94, whereas the budget estimates provided for a deficit of 4.6 percent, the actual deficit was much higher at 7.4 percent. The main reason for the higher deficit was a sharp increase in revenue expenditure of the order of 18.9 per cent over the previous year. In 1994-95 the revised budgets show a deficit of 6.7 per cent. The 1995-96 budget projects a fiscal deficit of 5.5 per cent of GDP. If past experience is any guide, one can be certain that the target will not be adhered to. The public sector in India has been estimated to account for around 25 per cent Of overall health expenditure in the 1990s. The share of the state governments is estimated at 19 per cent and that of the Union government at 2 per cent. In 1991-92, the Union government expenditure on health was Rs. 1596 crores whereas the states' expenditure was Rs. 4227 crores, giving a share of 27.4 per cent for the Union government. The revenue expenditure of the Union government on social sectors in general, and health in particular, are presented in Table I. As is evident, while there has been an increase in revenue expenditure on socic'l sectors, its share in total revenue expenditure declined in the first two years of adjustment, although there has been a slight increase in the share in subsequent years. Despite this, the Union government's expenditure on social sectors is limited to around three per cent of total expenditure. As far as the share of health in social sectors is concerned, there has been a rise from 13 per cent to 15 per cent over the period under consideration. Another desirable feature is the rise in the share of public health in overall health expenditure. Most of the increase is on account of increased allocations for the National Tuberculosis Control Programme and the National AIDS Control Programme since 1992-93. The National Malaria Eradication Programme, which suffered a cut in allocations even in nominal terms