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This paper employs simultaneous equation modeling to analyze the political economy of public health in Jammu and Kashmir, examining the interrelationships between fiscal allocation, infrastructure development, and health outcomes. Using data from the Union Budget 2026-27, J&K Budget documents, NFHS-5, and administrative health statistics, we specify and estimate a three-equation system addressing: (1) the paradoxical relationship between fiscal dependency and superior health outcomes, (2) the curative-preventive imbalance in resource allocation, and (3) the emerging epidemiological transition. The results reveal that fiscal dependency enables health investment (elasticity 0.42, p<0.01) while simultaneously reducing local accountability (direct effect -0.18, p<0.05), with net positive effect on outcomes. The curative share of expenditure negatively affects population health (coefficient -0.23, p<0.01) and exacerbates male anaemia (coefficient -0.31, p<0.01), confirming gender bias in nutrition programming. Non-communicable disease burden responds significantly to urbanization (0.34, p<0.01), aging (0.41, p<0.01), and curative expenditure share (0.19, p<0.05). Policy simulations indicate that reallocating 5% of curative spending to prevention would reduce IMR by 1.2 points and male anaemia by 3.1 percentage points. The findings support targeted interventions including workplace iron supplementation, population-wide screening, and nutrition-specific budget lines.