Munich Personal RePEc Archive

Public Sector Spending and Economic Growth in India

Khundrakpam, Jeeavn Kumar (2003): Public Sector Spending and Economic Growth in India. Published in: RBI Occasional Papers , Vol. 22, No. No.1, 2 & 3 (2003): pp. 1-17.

[img]
Preview
PDF
MPRA_paper_51105.pdf

Download (187kB) | Preview

Abstract

The paper analyses the dynamic interaction between the public sector expenditure and national income in India for the period 1960-61 to 1996-97. It finds a stable long-run relationship between public sector expenditure and national income in India, with the causality running strictly from the former to the latter. The study also indicates that long-run positive impact of public sector expenditure on national income would turn adverse if the growth of the former is excessive. In the short-run, however, there is a trade-off between growth in public sector expenditure and income. Thus, though national income growth in India seems to be investment or demand led, there is the need for maintaining a proper balance between public sector expenditure and investment for economic growth.

UB_LMU-Logo
MPRA is a RePEc service hosted by
the Munich University Library in Germany.