An Emprical Analysis of the Impact of Public Expenditure on Education and Health on Poverty in Indian States

Abstract

The principal objective of this paper is to test whether public expenditures on education, health and development activities have been effective in reducing poverty in India. For sensitivity and robustness of the results, three different measures of poverty belonging to the Foster-Greer-Thorbecke group of poverty measures are used. We use various types of education expenditures, viz., government expenditures on elementary, secondary, higher/university and "other" levels. The data for fourteen Indian states from the 13th. to the 53rd rounds of the National Sample Survey of India are used for estimating poverty. Using unbalanced panel techniques, the study tests Fixed Effects, Randome Effects and OLS models, and concludes that education, health and development expenditures help reduce poverty. In particular, expenditure on higher, university, technical, adult and vocational educations as oposed to elementary and secondary education is more effecetive in poverty reduction. Several policy conclusions are also advanced. Data

Keywords: India, Poverty Indices, Public Expenditures on Education and Health, Fixed and Random Effects Models, Panel

JEL Classification: H51, H52, H53, O15, O53