Effects of Public Expenditure on Economic Growth and Poverty in Odisha

Abstract

The paper examines the effects of public expenditure on economic growth and poverty in Odisha during the period 2000–01 to 201415 using the annual data. The main objective of the paper is to examine the relationship between public expenditure, economic growth and poverty in Odisha using the econometrics techniques of regression and Granger Causality Test. The study finds that among the public expenditures (plan, non-plan and total expenditure), only the plan expenditure has a significant relationship with the economic growth (GSDP) of Odisha. There is bidirectional causality between plan expenditure and economic growth in Odisha. There is causality from economic growth to non-plan expenditure and total expenditure. We conclude that the plan expenditure which represents current development and investment outlays (expenditure) has been significantly influencing economic growth of Odisha, the therefore, Government of Odisha should increase the plan expenditure more than the non-plan expenditure.