Analysis of Social Sector Spending Across States Over Time in India

Social infrastructure is as critical for human resource development as physical infrastructure. This paper examines the social sector allocations across states over time and attempts to apply the convergence analysis for understanding the pattern of regional variation of per capita social sector expenditure in the liberalized era. The evidence on s - convergence shows that there is an increased divergence in terms of per capita social sector expenditure among the Indian states. Further, data negates the hypothesis of ‘absolute b - convergence’, which implies that states with higher initial levels of per capita social sector expenditure spend faster than those states with lower initial level of expenditure. Conditional b - convergence indicates that inter-state variations in the steady-state levels of per capita social sector expenditure are not due to variation of inter-state differences in gross state domestic product. Strict adherence to the FRBM Act forced the states to allocate small amount of financial resources towards meeting its social obligations. The trend has been more severe in case of poor states.