Does Government Spending on Social Sector Impacts Growth? An Analysis Across Indian States for the Last Two Decades

This paper attempts to examine the impact of government expenditure in social sector on economic growth at the state level for 15 major states. The study reveals that the share of social sector expenditure in aggregate expenditure has a positive impact on economic growth of states measured in terms of per capita Net State Domestic Product (NSDP). However, the impact on growth is not as significant as the impact of expenditure other than social sector that includes mainly spending on economic services. Another important finding from the study reveals that social sector expenditure has a more indirect impact on economic growth via the mode of human development.