Definition Health Expenditure: - Health expenditure refers to the sum of public and private health expenditure. It covers the provision of health services (preventive and curative), family planning activities, nutrition activities and emergency health aid, but does not include the provision of water and sanitation. It is calculated as a percentage of a nation's GDP. Total health expenditure is the sum of public health expenditure and private health expenditure in a given year, calculated in national monetary units at current prices. (WHO) Public health expenditure: Public expenditure consists of recurrent and capital expenditure from government budgets (central and local), external loans and grants (including donations from international agencies and non-governmental organisations), and social health insurance funds ( or mandatory). Public funds are state, regional, and local government agencies and social security systems. ) Private health spending: - Private health spending includes direct (out-of-pocket) spending by families, private insurance, charitable donations, and direct payments for services by private companies. )Health Financing System in IndiaHealth Financing:-Health Financing as “function of a health system concerned with the mobilization, accumulation and allocation of money to cover the health needs of the people, individually and collectively, in the health system”; the “purpose of health financing is to make funds available, as well as to establish the right financial incentives for providers, to ensure that all individuals have access to effective public and personal health care” (WHO 2007). Health financing has three key functions: revenue collection, pooling of resources......middle of paper......billions in 2004-2005 of which Rs. 20,884 million, equal to 68.49%, passed through the Ministry of Health and Family Welfare. State governments directly received 10.73% of the total external funds. Additional grants to NGOs accounted for 20.78% of the total foreign flow in 2004-2005.Reference1. http://www.who.int/whosis/whostat2006HealthFinancing.pdf2. http://data.worldbank.org/indicator/SH.XPD.PCAP3. Figure 1, Kataria, Financing of health services (BOP-WHO-1995 laboratory)4. http://www.tradingeconomics.com/india/health-expenditure-public-percent-of-gdp-wb-data.html5. Figure 2, total spending on public health, data source: http://data.worldbank.org/indicator/SH.XPD.PUBL6. Fig. 3, Public health expenditure (government), data source, http://data.worldbank.org/indicator/SH.XPD.PUBL.ZS7. Figure 4, data source, http://data.worldbank.org/indicator/SH.XPD.OOPC.ZS