Assessing Public Expenditure Efficiency at Indian States

This paper attempts to understand what drives the public expenditure efficiency among the States. For this, it looks at the role of economic growth as well as quality of governance. The results of input-oriented and output-oriented DEA approach finds a large variation in the efficiency of public spending as well as scope for resource saving among Indian States. The results suggest that States are spending their resources more efficiently on education than on health and overall social sector spending. Further, it also finds that both quality of governance and economic growth affects the efficiency of education, health, and social sector with governance to have larger effect compared to growth. Overall, the study suggests that focus on good governance could yield better outcomes from public spending