The Determinants of Public Expenditure Growth in Tamil Nadu After Economic Reform

DOI

10.2991/978-2-38476-575-1_2How to use a DOI?

Keywords

Public expenditure; population; inflation; ARDL; urbanisation; gross capital formation; Wagner’s Law; Tamil Nadu

Abstract

In Tamil Nadu, government activities and total public expenditure have grown significantly in absolute terms, relative terms, and as a proportion of NSDP over the years. This rapid increase in government spending calls for an analysis of the key factors driving this expansion and its impact on the state’s economy. A revised version of Wagner’s Law was adopted in this research, integrating 14 additional variables to assess their influence on government expenditure. Using time series data spanning 31 years from 1991 to 2022, during the post-economic reform period, the analysis employs the ARDL model and Granger Causality test. The findings indicate a long-term relationship among most variables, except for population and the number of literates. In the short term, per capita NSDP and FDI are identified as significant drivers of government expenditure in Tamil Nadu, while public debt shows a negative but significant effect. Furthermore, the Granger causality analysis highlights that factors such as per capita NSDP, FDI, public debt, gross capital formation, number of employees, per capita capital expenditure, social security and welfare measures, and urbanisation have a significant causal relationship with government spending, underscoring their interdependence. The paper concludes with several policy recommendations. To ensure sustainable economic growth and development, the Tamil Nadu government should focus on diversifying its revenue sources, re-evaluating public expenditure priorities, and promoting inter-generational equity. Additionally, adopting a multi-dimensional strategy in education, emphasising debt consolidation, and maintaining fiscal discipline will be essential to strengthen the state’s education sector and reduce the adverse effects of public debt.

Copyright

© 2026 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - K. Hajira Sulthana
AU  - Moon Moon Hussain
PY  - 2026
DA  - 2026/05/06
TI  - The Determinants of Public Expenditure Growth in Tamil Nadu After Economic Reform
BT  - Proceedings of the International Conference on Dynamics of Environment, Sustainability, and Gender Disparities: A Holistic Dialogue for Inclusive Futures (ICDESGD 2025)
PB  - Atlantis Press
SP  - 3
EP  - 21
SN  - 2352-5398
UR  - https://doi.org/10.2991/978-2-38476-575-1_2
DO  - 10.2991/978-2-38476-575-1_2
ID  - Sulthana2026
ER  -