The Impact of Education Expenditure on India's Economic Growth

Abstract

This paper tries to redefine the relationship between expenditure

in education and economic growth in the Indian economy. Earlier

emperical results reveal mixed results about the relationship in the

Indian context. An econometric model is applied to the analysis

with time series from 1980-2008, and the results obtained indicate

that there exist a long-run relationship between education

expenditure and economic growth. The error-correction estimates

show that education expenditure per labour have a lesser impact

on economic growth as compared to physical capital per labour. It

can be observed that a 1% increase in physical capital per labour

will lead to 0.28% increase in GDP per labour, and a 1% increase

in government expenditure on education per labour will lead to

0.11% increase in GDP per labour.