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Determinants of economic growth at the sub-national level in the Indian context: Role of governance

Publication date

Nov, 2024

Details

NIPFP Working Paper No. 420

Authors

Aakanksha Shrawan

Abstract

The present study attempts to assess the potential determinants of economic growth at the state-level for 27 Indian states for the period 2000-01 to 2021-22. We also incorporate a quantitative variable, unspent funds as a proportion of total budgeted expenditure, to control for the quality of governance, along with other macroeconomic and structural factors. The paper finds a negative and statistically significant impact of unspent funds on the per capita GSVA growth of the states under study at the aggregate level. In addition, we also evaluate the unique growth experiences of different states separately without assuming a homogeneous response of the explanatory variables on the growth processes of all states which might assist the 
policymakers in offering explanations for the better or worse performing states with respect to the same macroeconomic variable.  
 
JEL Classification: C23, O10, O11, O14, O40, L80   
 
Keywords: GSVA Growth, Unspent Funds, Feasible Generalised Least Squares, Industry, India
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