Disaggregated Development Expenditure and Economic Growth: A Second-Generation Panel Data Analysis of Selected Indian States

Abstract

This paper used panel data to analyse the impact of the disaggregated development expenditure (social and economic services expenditures) on economic growth for the fourteen major States of India, categorised into high and low-income States. The timeline of the study is between 1990-1991 to 2020- 2021. The results of Panel DOLS revealed that, in general, the economic services expenditure contributes more to economic growth than the social services expenditures and makes a difference between the income levels of the States. The Granger causality test (Dumitrescu and Hurlin) results showed that the Wagner and Keynesian laws hold good in the short run.