Author(s): Bhola Khan

Abstract: In this article attempt is made to establish the relationship between the developmental and non-developmental expenditure in India and its influence over the economic growth. For this, secondary data are used for the period of 1991-2021 and sourced from various state finance reports, Ministry of Statistics and Programme Implementation, and World Bank, Indian Public Finance Statistics, and annual budget allocation. To check the long-run and short-run relationship among the variables Autoregressive Distributed Lag (ARDL) model, Bound Test and Error Correction Model techniques have been used. The ARDL estimates indicate that in the long-run development expenditure having positive impact over the economic growth, however, it is statistically insignificant. While population growth rate having negative impact over the economic growth. Further, Error Correction Model (ECM) estimates revealed that there is an existence of short-run relationship among the variables too and it is very sensitive, its adjustment rate is about 80 percent and statistically significant at 5 percent level. Therefore, it is suggested to the government to focus more on the short-run goals rather long-run issues because if the problems are address immediately at the time when it arises then it would also assist to achieve the long-run sustainable economic growth.

DOI: 10.22271/maths.2023.v8.i2a.938

Pages: 01-08 | Views: 369 | Downloads: 69

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