The growth and composition of public expenditure in Odisha

The present study attempts to find out the growth and composition of public expenditure in Odisha using time series data for a period of 55 years from 1951–2006. It also tries to test the structural change in the pattern of growth of expenditure using dummy variable technique. The validity of Wagner's hypothesis for Odisha has also been checked using simple income elasticity method. Last but not the least the study also attempts to test stationarity of time series data and find out the long term equilibrium between Real Total Expenditure (RTE), Real Revenue Expenditure (RRE), Real Capital Expenditure (RCE) and Real Per capita Net State Domestic Product (RNSDP). The findings show that the growth rate of Revenue expenditure surpasses that of capital expenditure and each category of expenditure have undergone structural change from pre reform to post reform period. The study finds out that Wagner's Hypothesis is valid for both Total and Revenue expenditure and not for Capital expenditure. Finally Johansen co integration test finds out that both RTE and RRE have long term equilibrium with RNSDP but RCE does not have any long term relation with RNSDP.