The Relationship between Public Expenditure and Economic Growth among Indian States

The increase in public expenditure plays a significant role in employment creation, distribution of income, poverty reduction, and economic growth for developed as well as developing countries like India. The Indian economy faces a number of challenges such as increasing unemployment, inequality, and poverty during the last few decades, and it has become more challenging after the COVID-19 pandemic. In this situation, the Government of India is increasing its public expenditure to resolve the economic and social challenges, especially after the COVID-19 pandemic. Therefore, this paper examines the relationship between public expenditure and economic growth among the Indian states as per the Keynesian theory of public expenditure as well as Wagner’s hypothesis during 1993-2022 for selected 24 Indian states and during 2001-2022 for 28 Indian states.