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Government Spending, Growth and Poverty in Rural India
Author(s) -
Fan Shenggen,
Hazell Peter,
Thorat Sukhadeo
Publication year - 2000
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1111/0002-9092.00101
Subject(s) - rupee , poverty , productivity , investment (military) , government (linguistics) , economics , government spending , government expenditure , rural poverty , economic growth , agricultural economics , development economics , business , public finance , political science , finance , macroeconomics , welfare , politics , exchange rate , law , market economy , linguistics , philosophy
Using state‐level data for 1970–93, a simultaneous equation model was developed to estimate the direct and indirect effects of different types of government expenditure on ruralpoverty and productivity growth in India. The results show that in order to reduce rural poverty, the Indian government should give highest priority to additionalinvestments in ruralroads and agriculturalresearch. These types of investment not only have much larger poverty impacts per rupee spent than any other government investment, but also generate higher productivity growth. Apart from government spending on education, which has the third largest marginalimpact on ruralpoverty and productivity growth, other investments (including irrigation, soil and water conservation, health, and rural and community development) have only modest impacts on growth and poverty per additional rupee spent.