Relating Public Expenditure with Trade and GDP in India : An Analytical Note

Public expenditure is a catalyst of economic growth, especially in a federal economy like India. When the magnitude and growth of GDP, Exports and Imports define the strength of a fast growing economy, the role of public expenditure in influencing them emerges as a vital area of research. Given the fact that India has been witnessing a rapid economic growth with her GDP growing at an average of around 7 percent annually during the last few years and the volume of trade growing quite satisfactorily during the same period, it creates enormous curiosity to examine whether public expenditure of the country has played any significant role towards such achievement. Thus, the present paper tries to examine the influence of India's public expenditure on her GDP, exports and imports during the period 1982-83 and 2009-10. With the help of multiple regression analysis it has been established that there has been a significant impact of both development expenditure and non-development expenditure of government of India on the three major indicators of economic performance of the country viz. GDP, exports and imports