Factors contributing to social sector expenditure: a case study of indian states

Abstract

The study attempts to identify the factors influencing social sector expenditure across Indian states. Social sector expenditure refers to public expenditure going for social sectors. This newlineissue assumes importance in the Indian context, as the disparity related to the outcome newlineindicators has increased in the past years across the Indian states, despite the fact that public newlinespending has an important role in improving the basic social indicators. The factors that have newlinecontributed to social sector expenditure may or may not have corresponded to the rationale newlinestated for the same. The rationale for public expenditure in social sectors is its role in newlinecorrecting market failures and redistributive purposes. The study therefore has tried to newlinecontrast the actual features that have contributed and the rationale of social spending. It newlinefollows a positive approach as it attempts io draw inferences based on the allocation patterns. newlineThe specific objectives of the study were to investigate the long run relation between income newlineand social sector expenditure and to analyse within the state and interstate allocation patterns. newlineThe social sector expenditure across states varied much and the analysis based on quartile newlinerankings intended to capture the interclass movements. It clearly revealed that high income newlinestates spend more and low income states less. The examination of the long run relation newlinebetween income and social sector expenditure using cointegration analysis, revealed that out newlineof fourteen states, nine exhibited a long run tendency for both the variables to rise. However newlinethe proportion of the income goingfor social spending was found to be declining for high and newlinemiddle-income states and increasing for low-income states implying that a kind of threshold newlinelevel oper;:1ted for this proportion.