 Public expenditure, private investment and income: evidence in indian statesJournal of Developing Areas, 2013, vol. 47, issue 1, 181-205 Abstract: The Fiscal Responsibility and Budget Management (FRBM) Act 2003 was introduced in India in order to reduce revenue deficit by curtailing revenue expenditure. This paper examines the impact of public expenditure by type and nature on the income by constructing new data on combined capital expenditure and combined revenue expenditure of Centre and State governments of 15 major States during the period 1993–94 to 2004–05. This paper finds that, though public expenditure crowds-out private investment, public expenditure of all types and nature positively contributes to state income due to the inclusion of some productive expenditure in the revenue account. All revenue expenditures are not growth retarding, and specifically, infrastructure investment may be used as an instrument by the Central and State governments directly for equitable allocation of private investment to achieve balanced income across states and higher economic growth as a whole. Keywords: Combined revenue expenditure; combined capital expenditure; public investment; domestic private investment; foreign private investment; Crowding-in/-out; Panel data; Indian States (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:jda:journl:vol.47:year:2013:issue1:pp:181-205 Access Statistics for this article More articles in Journal of Developing Areas from Tennessee State University, College of Business Contact information at EDIRC. |
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