Analysis of Social Sector Spending Across States Over Time

Abstract

Social infr as tructur e is as critical for human reso ur ce developmentas ph ys ical infra s tructur e. Social sec tor progr a mm es and th e irimpl eme nt atio n fa ll la rg e ly und e r th e j urisdi c ti o n of th e StateGovernments. State finances have been under strain s ince the beginningof 1990s. The study attempts to apply the c onvergen ce a nalysis forunder sta nding the pattern of regional variation of per capita socialsector expenditure in the Uberalized era. The a - conve rgence s how s thatthere is strong ev id ence that the lndian states have diverged in terms ofper cap ita social sec tor ex pe nditur e over the period of analysis. Da tanega tes the hypothesis of 'absolu te /3 - convergence'. This impUes th at thesta tes with higher initial leve ls of per capi ta socia l sector expen ditur espe nd faster than tho se sta t es with lower irutiaJ level of expe nditur e.Conditional /3 - co nve rg ence indica te tha t int er-s tat e variations in thesteady-state leve ls of per ca pit a social sector expendi tur e are not dueto variatio n of inter-state differences in State GDP.