Dynamic Patterns of Government Spending Allocation in Indian States

Abstract

This study examines the allocation and fluctuation of 12 major categories of government spending at the state level in India. Using panel data from 15 prominent Indian states from 1990 to 2021, a panel autoregressive distributed lag (ARDL) method is employed. The findings reveal that increased central government funding encourages spending on education, agriculture, irrigation, disaster management, nutrition, and rural and urban development. In contrast, economic growth and increased revenue shift focus to energy, healthcare, urban development, transportation, communication, and water supply and sanitation. High public debt adversely affects all spending categories, highlighting the cyclic nature of various expenditures.