International Journal of Social Science Research (IJSSR)

Determinants of Public Expenditure in Punjab and Haryana: A Comparative Analysis (1991-2016)

Abstract: This study examines the determinants of public expenditure in the Indian states of Punjab and Haryana from 1991-92 to 2015-16, focusing on economic and demographic factors such as per capita income, population, and urbanization. Drawing on Wagner’s Law and empirical data, the analysis employs a multivariate regression model to assess the impact of these variables on total state expenditure. Results indicate that urbanization significantly drives public expenditure in both states, while population growth has a negative effect, and per capita income shows no significant impact. Comparative analysis reveals Haryana’s higher allocation to development expenditure, contributing to its faster economic growth compared to Punjab. The findings underscore the importance of prioritizing development expenditure and addressing non-economic factors like governance and institutional efficiency to optimize public spending.