Gyan Management

Public Expenditure and Economic Growth: Evidence from India

Kulwinder Singh¹ , Jagmohan Singh² and Anish Slath³

First Published 7 Jul 2026. https://doi.org/10.1177/09747621261459361

Article Information

Corresponding Author:

Jagmohan Singh, University Institute of Liberal Arts and Humanities, Chandigarh University, Mohali, Punjab 140413, India.
Email: jagmohanpuchd@gmail.com

¹University Business School, Panjab University, Chandigarh, India

²University Institute of Liberal Arts and Humanities, Chandigarh University, Mohali, Punjab, India

³University Institute of Tourism and Hotel Management, Panjab University, Chandigarh, India

Creative Commons Non Commercial CC BY-NC: This article is distributed under the terms of the Creative Commons Attribution-NonCommercial 4.0 License (http://www.creativecommons.org/licenses/by-nc/4.0/) which permits non-Commercial use, reproduction and distribution of the work without further permission provided the original work is attributed.

Abstract

Public expenditure is a vital element in the public budgeting process, which is considered a pivotal catalyst for economic growth in developing countries. Wagner’s Law and Keynesian Hypothesis established causality between public expenditure and economic growth, which warranted empirical examination. This study investigates the linkage between public expenditure and economic growth in India from 1970–1971 to 2024–2025, using Johansen’s cointegration approach and Granger causality. The findings of the study confirmed a long-run relationship between public expenditure and economic growth. The Granger causality test further showed unidirectional causality running from public expenditure to economic growth, which supports the Keynesian hypothesis in the case of India. The study recommends that policymakers should adopt an expansionary yet well-structured fiscal strategy that prioritises productive public expenditure. A balanced expansion of both capital and revenue expenditure can serve as an effective policy tool for boosting long-term economic growth.

Keywords

Public expenditure, economic growth, Wagner’s law, Keynesian hypothesis, time series analysis, India

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