Public education expenditure plays a pivotal role in human capital formation, skill development, and long-term economic growth. In India, persistent inter-state disparities in public spending on education have contributed to unequal literacy outcomes and workforce preparedness. This study examines state-level public education expenditure in India and empirically evaluates its impact on literacy rates using cross-sectional regression analysis. Drawing on data from state budget documents, the Economic Survey of India, and Census-based literacy indicators, the paper analyses variations in education spending across 36 states and Union Territories. The regression results reveal a statistically significant and positive relationship between education expenditure (as a percentage of Gross State Domestic Product) and literacy outcomes, with education spending explaining nearly two-thirds of the inter-state variation in literacy rates. The findings underscore the economic importance of sustained and outcome-oriented public investment in education. The study further highlights the role of education spending in strengthening skill development and bridging the academia–industry gap. Policy recommendations emphasize increasing public education expenditure, improving spending efficiency, and aligning educational investments with labour market requirements to ensure inclusive and sustainable growth.
Mr. Navanath Kundlik Pujari (2026) studied this question.