Public Spending and Hdi Indicators: Revisiting India's Fiscal Policy

aPUBLIC SPENDING AND HUMAN DEVELOPMENT INDICATORS:

REVISITING INDIA’S FISCAL POLICY

PROJECT SUBMITTED TOWARDS THE PARTIAL FULFILMENT OF

THE REQUIREMENT OF PAPER XII OF SEMESTER VI, 2012

BY

THE STUDENTS OF ECONOMICS HONOURS

ST. XAVIER’S COLLEGE (AUTONOMOUS), KOLKATA.

GROUP MEMBERS:

LAVANYA SUSAN TOPPO (209), SWATI SINGRODIA (213),

JASMINE MEHTA (221), SUJOY DUTTA (224), VEDIKA AGRAWAL (234)

CAMELIA BAG (235), PIU GHOSH (239), PRITHWIS LAW (242),

MANITAM BISWAS (246), SREEPARNA DEY (272).

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ACKNOWLEDGEMENT

We are grateful to Rev. Dr. J. Felix Raj, S.J., Principal, St. Xavier’s College (Autonomous),

Kolkata for all the encouragement and infrastructural support. We express our sincere gratitude

to Prof. B. Da’Silva, Vice Principal, Arts and Science Department and Fr. Dominic Savio S.J.,

Vice Principal, Department of Commerce (Morning) and Business Administration. We would

also like to thank Professor Abhirup Sarkar, for his insightful contributions to our project and

guiding us through the basic theory of our statistical analysis. We express our heartfelt thanks to

teacher Prof. P. P. Ghosh for guiding our project. We are also grateful to the other faculty

members of the Department of Economics.

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ABSTRACT

The nature and composition of government spending has been a divisive issue ever since J.M.

Keynes first highlighted the size of the role a government needs to play in an economy. There has

been extensive argumentation for both major stances –the first being that the government should

invest primarily in directly productive activities and in essence operate as a purely economic agent;

and the other being that as an agent for collective action by society, the government needs to

specifically invest in social sectors to compensate for the shortfall in private participation.

Our project presents a theoretical and normative case for government spending in those sectors

directly associated with the Human Development Index –...