Kerala's development experience has been distinguished by the primacy of the social sectors. Traditionally, education and health accounted for the greatest shares of the state government's expenditure. Health sector spending continued to grow even after 1980 when generally the fiscal deficit in the state budget was growing and government was looking for ways to control expenditure. But growth in the number of beds and institutions in the public sector had slowed down by the mid-1980s. From 1986-1996, growth in the private sector surpassed that in the public sector by a wide margin. Public sector spending reveals that in recent years, expansion has been limited to revenue expenditure rather than capital, and salaries at the cost of supplies. Many developments outside health, such as growing literacy, increasing household incomes and population ageing (leading to increased numbers of people with chronic afflictions), probably fueled the demand for health care already created by the increased access to health facilities. Since the government institutions could not grow in number and quality at a rate that would have satisfied this demand, health sector development in Kerala after the mid-1980s has been dominated by the private sector. Expansion in private facilities in health has been closely linked to developments in the government health sector. Public institutions play by far the dominant role in training personnel. They have also sensitized people to the need for timely health interventions and thus helped to create demand. At this point in time, the government must take the lead in quality maintenance and setting of standards. Current legislation, which has brought government health institutions under local government control, can perhaps facilitate this change by helping to improve standards in public institutions.