Unlocking SDG potentials through the synergy of public spending and governance: A district level analysis in Assam

• Public spending positively impacts SDG achievements but is mediated by governance quality. • The study highlights governance as a key factor in addressing inter-district disparities in Assam. • Better-governed districts utilize public spending more effectively, improving SDG outcomes. The Sustainable Development Goals (SDGs) provide a global framework to address critical issues such as poverty, inequality, and climate change by 2030. India has been adopting a localization strategy towards implementing SDGs with Assam emerging as one of pioneer states in articulating localized strategy. Despite its abundant natural resources, Assam faces considerable developmental challenges in health, education, poverty, gender inequalities and others due to limited fiscal capacity. The inter-district variations also raise concerns whether such disparities are due to inadequate resource allocation or underlying governance issues, or both? Based on district level data, the present paper analyses the intricate interplay between public spending and governance quality in shaping SDG outcomes specially in the social sector. Such understanding is crucial as districts are the implementing unit when it comes to public spending. Regression results show that a 1% increase in per capita social-sector spending raises the social-sector SDG index by about 8.2%. The positive and significant interaction with governance quality (elasticity = 0.075) indicates that districts with stronger institutions achieve substantially higher SDG gains from public expenditure. This study advances the existing literature by providing subnational evidence on the nexus between public spending, governance quality, and SDG outcomes at the district level in Assam, India. By analyzing the uneven distribution and effectiveness of public expenditure in critical sectors, it contributes to understanding the institutional and fiscal drivers of inter-district disparities in SDG achievements and underscores the need for a dual strategy of equitable financing and governance reform to accelerate progress.