What question did this study set out to answer?

This research aims to analyze how government spending in India varies by category in response to funding sources and economic conditions.

January 22, 2026

Dynamic Patterns of Government Spending Allocation in Indian States

Key Points

This research aims to analyze how government spending in India varies by category in response to funding sources and economic conditions.
Employs panel data from 15 Indian states between 1990 and 2021
Uses panel autoregressive distributed lag (ARDL) method for analysis
Increased central government funding leads to higher spending on education and agriculture
Economic growth shifts focus toward energy and healthcare expenditures
High public debt negatively impacts all categories of spending
Findings suggest cyclic fluctuations in government expenditures

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. JEL Codes: H50, H72, E32, C33

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