Economic and political determinants of social sector expenditures: evidence from Indian states

Abstract

ABSTRACTPolitical parties aim at getting re-elected and their actions are often in conflict with the economic and welfare objectives of the government. In this context, the paper endeavours to study the economic and political determinants of social sector spending in India and understand their relative importance. For this state-level panel analysis from 2001 to 2013, the states are classified into less developed and developed states. The findings show that both economic and political factors determine the social sector expenditure; however, the Shapley decomposition analysis indicates that the relative contribution of economic factors is much higher as compared to political variables.