Determinants and Impact of Public Expenditure in Odisha

The theoretical framework and rationale of the study assess the most important fiscal parameter of the state of Odisha i.e., Expenditure parameter. As we know, aggregate of the expenditure of the state consists of Revenue expenditure and Capital expenditure, among which the largest share is contributed by Revenue expenditure. The paper highlights the responsiveness of expenditure to the automatic change in NSDP Elasticity approach, position of odisha among the 18 major non-special category states in terms of infrastructural development, bank credit, factory employment, level of urbanisation etc. and also examine the causative relationship between SDP and different expenditure variables in Odisha. The study is based on secondary source of data for the State from different government publications, Budget documents, Finance Accounts etc. The paper used different methodologies for analysis, which includes simple statistical techniques such as, ratio, percentage, and also Regression Analysis to estimate growth. In this regard models like, semi log, multiple regression, correlation, VAR models are used to analyse the time series data from 1980-81 to 2014-15 on revenue and capital expenditure of state finances . Apart from that to show the response of revenue expenditure to the automatic change in NSDP, Elasticity approach is utilized. The major results of the study are that higher growth in total expenditure in period t-1 leads to higher growth of SDP in period t. The same result holds only in case of growth of Total Non-Plan Expenditure. The results of VAR Granger Casualty Test are similar to the VAR Model excepting that Total Non-Plan Expenditure is found independent of SDP and there is also independence of SDP from Total Non-Plan Expenditure. KEY WORDS: budget, capital, elasticity, finance, grants, growth, NSDP, expenditure, VAR