IASSI-Quarterly

Using balanced panel data from 2004 to 2017, this study investigated the dynamics of education spending and economic growth in selected hilly northern Indian states. The findings revealed a positive and significant relationship between public educational spending and economic growth. The results demonstrated that public spending on higher education has a favourable and considerable impact on the growth process of the specifically classified states, even at a disaggregated level. This research, therefore, signifies that education is a crucial component of economic growth in the northern states of India. Hence, optimal resource allocation to the education sector by policymakers/governments will have a favourable impact on these states’ growth performance through improving knowledge output. Indeed, the government expenditure on various levels of education can be a vital factor for economic growth in the hilly states of India. States should develop policies that promote high-quality education for all citizens, which can only be done with increased government education investment. This would be one of the most sensible measures towards reducing India’s inter-state growth gaps and making “convergence” factors more fathomable.