Trends and Growth in Public Expenditure: A Study of Himachal Pradesh

This study is an attempt to highlight the trends and composition of public expenditure in Himachal Pradesh, covering the time period from 1990-91 to 2019-20. Data has been collected from various Government of Himachal Publishes documents like Budget in Brief, Annual Financial Statement, Explanatory Memorandum, Economic Survey of Himachal Pradesh, and Statistical Yearbook of Himachal Pradesh in order to analyze the trends and growth of public expenditure. Compound annual growth rate (CAGR) has been used to find the trend and rates of growth of the variables and the direction of change in variables. In the present study, buoyancy is used to find out how buoyant the government expenditure of the state is with respect to Gross State Domestic Product (GSDP). The total public expenditure in the state, irrespective of revenue and capital accounts has increased gradually over the period of time 1990-91 to 2019-20. In comparison to the CAGR of gross state domestic product (GSDP), total expenditure shows a smaller CAGR on real as well as nominal prices which implies that public expenditure is growing less than the income of the economy. The observed increase in the share of public expenditure to GSDP was the result of continued growth in the revenue expenditure which entails that revenue expenditure occupies a major share of GSDP of Himachal Pradesh which is non-developmental in effect. The capital expenditure is mere 4 percent of GSDP in 2019-20 which was 6 percent in 1995-96. It can be stated that there has been a gradual decline in the capital expenditure in Himachal Pradesh in terms of its relative share and it provides a pointer to the development of the state in the long run. The public debt expenditure decreases its share as in 1990-91 share of public debt was 92 per cent of GSDP and in 2019-20 share of public debt became 3 per of GSDP which is desirable to reduce the fiscal burden of state government.