CHAPTER I11 TREND AND GROWTH OF STATE EXPENDITURE OF INDIAN STATES The public sector has been assigned a key role in the economic development of underdeveloped countries and hence there has been a rapid expansion of the publlc sector 1 in a developing economy like India. As Flicks aptly points out, "The rapid expansion of public sector is now a universal phenomenon. " Adolf wagner2 has established a functional relationship between industrialisation and the relative importance of public sector activities. According to Wagner's law, the expansion of public expenditure is in proportion to the growth of the Gross National Product. According to Wagner, an increase in state activity is accompanied by an increase in government expenditure as a proportion of National Income. This is due to the fact that the government has to perform a number of functions more efficiently, which has led to an intensive growth in public activity thereby increasing government expenditure. According to Peacock and Wiseman, public expenditure grows over time, not at a constant rate, but on an ascending spiral. Social emergencies like war and
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CHAPTER I11
TREND AND GROWTH OF STATE EXPENDITURE
OF INDIAN STATES
The public sector has been assigned a key role in
the economic development of underdeveloped countries and
hence there has been a rapid expansion of the publlc sector 1
in a developing economy like India. As Flicks aptly
points out, "The rapid expansion of public sector is now a
universal phenomenon. " Adolf wagner2 has established a
functional relationship between industrialisation and the
relative importance of public sector activities. According
to Wagner's law, the expansion of public expenditure is in
proportion to the growth of the Gross National Product.
According to Wagner, an increase in state activity is
accompanied by an increase in government expenditure as a
proportion of National Income. This is due to the fact
that the government has to perform a number of functions
more efficiently, which has led to an intensive growth in
public activity thereby increasing government expenditure.
According to Peacock and Wiseman, public
expenditure grows over time, not at a constant rate, but on
an ascending spiral. Social emergencies like war and
depression require a sizeable increase in their relative 3
share of public expenditure. Peacock and Wiseman relate
the growth of public expenditure to external forces like war
and displacement effect.
"One of the characteristics of economic
development and the course of industrialisation is the urban
movement and with it disappears the informal security of the
family and village. Urban population must be supplied with
formal social security, unemployment insurance and formal
community protection to replace the family and village
functions. This would support the hypothesis of an
increasing government' share In national inc~me."~ Thus
industrialisation, urbanisation and economic development
necessitate the rapid growth of public expenditure in an
economy. In addition, the expansion of the public sector
may also be owing to the growth of population, rise in
prices and economic growth.
Against this background, an attempt has been made
in this chapter to trace the growth of expenditure of twenty
two Indian states in nominal and real terms. Further,
p3pulation is considered as a permanent factor influencing
the growth of expenditure, as the rise in population leads
to a rapid rise in the demand for governmental services. A
given level of services may no longer be sufficient for an
increased level of population.
The. State D,omestic Product is also equally
important in influencing the growth of state government's
expenditure. As the level of State Domesti-c Product rises,
the proportion of different governmental services like
education, health, and transport to the State Domestic
Product will also grow. Therefore, in this chapter, an
analysis has also been made in terms of expenditure per head
of population and expenditure as percentage of the State
Domestic Product for 1969-70, 1980-81 and 1988-89.
The growth of expenditure may also be owing to
rise in prices. In order to eliminate the effect of price
change^,^ the growth of states' expend~ture in real terms is also examined. Thus, this chapter elucidates the trend and
pattern of states' expenditure in aggregate terms, the ratio
of expenditure to the State Domestic Product, and the
expenditure per head, both in nominal and real terms, during
1969-70 to 1988-89.
In order to analyse the trend, pattern and growth
of states' expenditure, public expenditure has been divided
into two main categories. They are Capital and Revenue
expenditure. It is also classified as development and non-
development expenditure. Development capital expenditure is
again divided into expenditure on Agriculture, Industries
and Public Health. Similarly, revenue expenditure is
divided into development and non-development revenue
expenditure. Development revenue expenditure comprises
expenditure on education, public health,-agriculture and
industry. Under non-development revenue expenditure,
expenditure on administrative services is also considered.
The following chart gives a clear picture of the
classification of expenditure of state governments.
( CHART - I I STRUCTURE OF STATE GOVERNMENT'S EXPENDITURE
I I
CAPITAL EXPENDITURE
I- I
I REVENUE EXPENDITURE
I-- I DEVELOPMENT NON-DE~~EIQPMENT DEVELOPMENT NOS-DEV~LOPMENT EXPENYITURE EXPENDITURE EXP~NOI'I'L'Hb EXPEYDITURI:
I
AGR~CULTUHE INDUSTRY PUBLIC HEALTH
1-'-1 I PUBLIC EDUCATION AGRICULTURE INDUSTRY 1 HEALTH
3.2 CAPITAL EXPENDITURE
I ADMINISTRATIVE SERVICES
Capital expenditure depends on various
imponderables like the floating of debt in the open market,
mobilisation of small savings, availability of credit, flow
71mE 3.11 U P l T M EXPUDITURE DF I lOIW STATES WIllN6 1969-70, 19W-81 AND 198D-89
I 2 Ranipur 3,177 I l b . l I I 1 8,7bO 117.7111 (97.01 I (93.911
13 Ileghalya 2,036 (13.8111 6,339 116.3111 (96.5) I (92.0):
14 Yagaland 525 i21.8111 2,477 123.6111 7,111 120.8) I I (95.5 11 196.411 193.011
17 Rrjasthsn
I B Bitkim
19 Tamil Madu
20 Tripura
21 U t t a r Prrdlsh 4,722 11.2111 47,079 13.3111 77,643 (1.5188 (120.911 197.811 (97.811
22 k s t L n o a l - 2.BO 10.711: 10,208 (1.1111 23,328 ( 1 . 2 ) I I
A l l Btatms 30,050 3,12,870 7,0S,451
h r c m t Rmsmrw Bank at Ind ia Bul lmtin, 1969-70-19BB-89 h t m I O 8hw th. p r c m t r g . of Cap i ta l i tevelopent Erpmditurm i n Stat.
D m m t I c PrO*Kt. : Oho* th. pwemtagm of Cap l ta l Dmwlnpmmnt Expmdl tu re I n To ta l
C q l t a l E q n d l t u n
: 1w-m I Imc-oI ;-I
1- 81. 6 t h lb. :hr u p i b I M k t Rlm I M Cprntmt Rks : Y Pvmt Rlm I lt Pmtmt Rlm
I lin Ibl : L Pa capita lrdn ot: Pa capita lndn ot I Rr u p i b lrdn ot I Pa upita lnOlx ot j lin lbl earth j (in Ibl BrorUl I (in b! BlPlUl I (in bl earth
0-1 I
19 lull m 3.9 17.6 m 6.3 110 s.8 no 7.3 IZ
per cent in 1969-70, Orissa with 5.9 per cent and 7.5 per
cent in 1980-81 and 1988-89 respectively. The lowest
percentage share in the State Domestic Product is shown by
West Bengal both in 1969-70 and 1980-81, and by Tamil Nadu
in 1988-89.
Table 3.4 presents the growth of per capita
capital development expenditure of Indian states during
1969-70, 1980-81 and 1988-89. Andhra Pradesh, Assam,
Gujarat, Himachal Pradesh, Jammu and Kashmir, Karnataka,
Maharashtra, Nagaland, Orissa, and Rajasthan show a higher
capital development expenditure than all states' per capita
Of Rs.9.10 in 1969-70. But in 1980-81, Andhra Pradesh,
Gujarat, Haryana, Himachal Pradesh, Jammu and Kashmir,
21 U t t a r Pradash 789 i0.05111 2 , 8 1 i0.05111 1 1.611 I 3.611
22 Mast Banpal 645 ( 0 . l l l I I 1,587 (0.07111 1 6.011 1 5.91 I
A11 8 t a t n 21,766 20,764
B o l l r n r L u r v a Dank ~f Ind ia Bu l le t in , 1PbP-70 to I?@-89. b t a I I 1 skpl tk p n r c n t r g o of Capital E x p m d l t u n m l n d u r t r l n in State
h s t l c P r d u c t . I Ika th p r c m t a g o of l h p i t a l Erpnndl ture on Agricul turm I n
rota1 c . ~ i t r l Exe# l i tun
IlWrn I 1W-u 19m-m B. s t a t 6 1-1
h. IR caplta I Y brmt R i c n : :It Cmstmt R i r a I At brmt R u m I M Cmstmt Ricn I lln bl I
I Pa c w t a lndrx of: Pa u p i t . 1tdwd.x of : R capita lnbr of : R u p i t a l n h x of :Ilnbl 8mth I l i n b l bpUl I l i nb l - 8mth : l i n b ) 8mth
(-0 , 1
I M h r r Pr* - 2.0 0.7 0.5 W 0.1 I 4
2 km - 2.0 0.7 7.0 M) 1.5 214
S B i k - 4.5 1.7 2.2 10 0.3 21
4 W u r t - 4.1 1.5 0.3 10 0.1 6
3 wm - 2.2 0.8 2.9 130 0.6 75
6 Whl R M - 27.8 10.3 5.1 ?O 1.1 10
1 J u L X I l h i r - 91.4 14.6 8.9 ?O I.? 13
8 KwMU - 0.2 0.07 3.4 170 0.7 1WO
9 W a l l - 6.8 2.5 b.5 W 1.4 !4
10 *a R M - 0.5 0.8 2.5 D 0.5 Al
11 I lrhrashtrr - 1.4 0.5 2.8 200 0.6 M
12 nmip~r - M-7 20.3 8.9 20 1,s 9
I S kphrlyl - 6.3 24.5 14.2 20 3.1 12
I4 h l m d - 65.3 24.2 $4.1 YI 7.4 50
15 bllv - 1.4 0.5 0.5 4b 0.1 ?O
lb hiah - 2.6 0.7 4.1 IbO 0.9 100
I1 birth - 10.1 3.7 1.1 10 0.2 5
18 Bikth - 28.1 10.4 18.2 M 4.0 JB
19 T r i l kdu - 1.2 0.4 2.8 250 0.6 II
10 Tr ipar - 11.9 4.4 4.4 4b 0.9 225
21 Utbkdah - 0.7 0.3 2.2 310 0.5 16b
n kt- - 1.9 0.4 2.5 210 0.1 m
411 Sbta 3.17 1.17 2.93 IS 0.6 3l
hmm u # MI, ~ l l t l n , 1~9-70 to l9m-m.
fourteen of the states. The lowest expenditure is shown by.
Sikkim Rs.89 lakhs in 1980-81 and Rs.73 lakhs in 1888-89.
The percentage share of this expenditus in the State
Domestic Product of all the states is very low, below 1 per
cent in 1988-89.
Table 3.10 presents the growth of expenditure on
health per head of Indian states during 1980-81 and 1988-89
both at current and constant prices. Per capita expenditure
on health of Bihar, Gujarat, Ilimachal Pradesh, Jammu and
Sourer: b s r r r r L n k o f Ind ia B u l l r t i n , 1969-70-I988-BP lot8 11: Shall tk p r c r n t a g r a t n m - d 8 v 8 l o p m t capital e x p m d i t u r r i n 6 t r t r
k w s t l c rrduct. I M tk w r c m t a g r of n o n - d 8 v ~ l o p r n t c a p i t a l r r p n d i t u r s i n Total
Cap i ta l E:#ndIturr.
79
IYL 3.121 m F mwmman WIIN UPBOITUE RR EW ff tmtw S T A ~ ILRUG Iwm, ~ s s ~ YO I- Iln Rpnl
: 1 9 ~ m I IsBS%L IW-8 51. Bbtn b. Ihr wlb I At D r m t P r h I Ilt Lnslnt Prlcn : Lt Ovmt Rim : A t Lnstat Prim
I lln kl I I Plr cqih Ir&r all R cqlb Indm of I hr upib lndn of I R cqdb lndtr of I l i n kl Bmth I [in FsI h t h I lin Rrl Bmth I lin lbl %aN,
lead to the rise of non-developmental expenditure such as
general administration, police, ~ustice, jails and convict
settlements. The non-developmental expendichre is grouped
under 1) administrative services, ii) cost of collection of
taxes, iii) debt servicing, iv) famine relief, and
v) others.
The non-developmental outlay on capital account
and its percentage share in the State Domestic Product and
in the total capital expenditure is represented in Table
3.11. The aggregate non-developmental outlay of all the
Indian States has increased 23 times, i.e., from Rs.1,100
lakhs in 1969-70 to Rs.24,843 lakhs in 1988-89. Maharashtra
incurred the highest expenditure of Rs.2,023 lakhs in 1969-
70, Uttar pradesh Rs.1,054 in 1980-81, and Madhya Pradesh
Rs. 6,107 in 1988-89. The lowest expenditure incurred by
Tamil Nadu was Rs.999 lakhs in 1969-70, Tripura Rs.61 lakhs
in 1980-81, and Sikkim Rs.206 lakhs In 1988-89. The
percentage share of this expenditure in the State Domestic
Product of all states is very low, below 2.9 per cent in
1988-89.
Table 3.12 shows the growth of non-developmental
capital expenditure per head of Indian states during
1969-70, 1980-81 and 1988-89 at current and constant prices.
Andhra Pradesh, Jammu and Kashmir, Maharashtra and Nagaland
showed higher per capita non-development cnpital expenditure
than the all states average of Rs. 0.19 at constant prices, -
and Karnataka, Gujarat, Haryana, Kerala, fiadhya Pradesh,
Punjab, Rajasthan, Tamil Nadu and Uttar Pradesh showed a
negative expenditure in 1969-70. In 1980-81, Gujarat,
Haryana, Himachal Pradesh, Jammu and Kashmir, Karnataka,
Rajasthan, Sikkim and Tripura showed a higher than all
States per capita expenditure of Rs. 0.67 at constant
prices. Further, Madhya Pradesh, Meghalaya, Orissa and
Punjab showed a higher index of growth than the all States
average index of 352 in 1988-89 at constant prices. The
index of growth increased from 547 per cent in 1980-81 to
1,636 per cent in 1988-89 at current prices, while it went
up from 200 per cent in 1980-81 to 352 per cent in 1988-89
in constant terms.
3.8 REVF,NUE EXPENDITURE
Revenue expenditure has a dominant role in the
Structure of expenditure of the state governments due to the
Year 61. states ------------------------------------------------------- Yo. 1969-70 1980-81 1988-09
I Andhra Praderh
2 Assre
3 Uihar
4 Eu ja r r t
5 Haryma
6 Himachrl Pradesh
7 Jranu t K r s M i r
8 Karnatrkr
9 Kerala
10 I l~dhya Prrdesh
11 Rrhrrarhtra
12 Manipur
13 llcphrlya
14 Nrprland
I 5 Orlsra
16 Punjab
17 Rajasthan
18 Sikkim
19 Tamil Yadu
20 Tr ipu r r
21 U t ta r Pradesh
22 Hest Urnpa1
A l l 8tat.s 3,10,18 14,80,781 40,%,003
b u r c e l Reserve Bmk of Ind la Bu l le t in , 19b9-70 to 1980-09 Rate I 8 Bko* tk percentaqe of Revenue Expenditure I n Str tm
*tlC Prodwt.
I l w m I 1w-U ; _ _ I
1W-W 8. 0 tata Ib. :hr c@tr I M Prmt Rim l At Cmht R u n l kt Dvnnt P r i m I M h t m t R i c n
I l in Rrl : : Rr capita lnda of: hr capita lndsr of I hr o p i b Indrx of : Rr raplta b x of I l in lbl PlDlth I l ln lbl hth : ( in fml 6 m M : I ln fml 6mL
8-0 I -.
increase in programmes of social and economic development.
Revenue expenditure comprises development expenditure which
further consists of expenditure on heal*, education,
agriculture, and industry. Non-development expenditure
which comprises administrative services is also included
under revenue expenditure. This item of expenditure has
been represented by Table 3.13. The aggregate expenditure
of all the states was Rs. 3,10,138 lakhs in 1969-70, which
increased to Rs. 14,80,780 lakhs in 1980-81, and further to
Rs. 48,56,003 in 1988-89. During 1969-70 and 1988-89, the
increment of this expenditure was 17 times. The highest
revenue expenditure was incurred by Maharashtra in all the
three periods Rs. 37,548 lakhs, Rs. 1,91,704 lakhs and Us.
6,23,977 lakhs respectively. During the same year the
lowest revenue expenditure was incurred by Nagaland (Rs.
2,002 lakhs), Sikkim (Rs. 2,982 lakhs), and again by the
same state (Rs. 10,348 lakhs). The percentage of revenue
expenditure to the State Domestic Product expenditure is
also higher than all other items of expenditure. Among the
special category states, the highest per cent of 83.4 is
shown by Nagaland, 113.0 by Sikkim and 90 again by Nagaland
in all the three periods respectively. The percentage share
in other states ranged from 11.4 (Uttar Pradesh) to 26
(Andhra Pradesh) in 1988-89.
Table 3.14 shows the growth of per capita revenue
expenditure of Indian states during 1969-70, 1980-81 and
1988-89 at constant and current prices. Andhra Pradesh,
Assam, Gujarat, Haryana, Jammu and Kashmir, Karnataka,
Kerala, Maharashtra, Nagaland, Punjab, Rajasthan, Tamil Nadu
and West Bengal showed a higher per capita revenue
expenditure than the all states per capita revenue
expenditure of Rs. 56.59 in 1969-70; Andhra Pradesh,
Gujarat, Haryana, Himachal Pradesh, Jammu and Kashmir,
21 U t t r r P r r d s l h 17,158 1 4.0111 1,19,882 18.5111 3,48,177 1 6.9111 (51.811 (69.811 (60.711
22 k s t k n o r l 4 4 1 4 b 78.355 1 8.7111 2,22,95b 110.4111
BOUrcel R e n r w Bank at I n d l r B u l l e t i n , 1969-70 t o 1960-89 Not@ I I1 8 h a the percentage of develop.ent revenue Expendi ture i n S ta te
' B o w t i c Product. I Ohmu t h e pa remtape of dsvs lopnent revenue Expendi ture i n To ta l
Rmvnw E a m d i t u r e
87 rm 3.161 emw s wc wra marpl~ raw mrm F m l m nnm URIK iw-m, i w am im-m
(in Wl
I wm-m I IW I-4
I W 81. 6btU #I. IRr capita I At hrrmt Ricn : 4t h t m t Mu I At k n n t Ricn I At h t n t R k n
I Iin Ibl I I Pu clplta lndn of! Rr clpita ln&x of I Rr uplta It&x of I Pu capita l&r d I (M ibl BmL I (in lhl h t h I [in Rl -. h t h I (in Rrl h t h
4-1
Agriculture and Industries. Table 3.15 illustrates the
trend in the revenue development expenditure of all the
Indian states and its percentage share in th? State Domestic
Product and in the total revenue expenditure. The aggregate
revenue development expenditure of all the states increased
from Rs. 1,62,970 lakhs in 1969-70 to Rs. 10,51,470 lakhs in
1980-81 and further to Rs.32,20,955 lakhs in 1988-89.
Maharashtra incurred the largest revenue development
expenditure of Rs. 18,160 lakhs, Rs. 1,27,787 lakhs and Rs.
3,81,791 lakhs in 1969-70, 1980-81 and 1988-89 respectively.
During the same period, the lowest revenue development
expenditure was incurred by Nagaland (Hs. 1,061 lakhs),
Sikkim (Rs. 2,477 lakhs), and again Sikkim (Rs. 8,321
lakhs). The percentage share of this item of expenditure in
the State Domestic Product is higher in the case of special
category states, which ranged from 60.9 per cent (Sikkim) to
22.2 per cent (Manipur) in 1988-89. Among the other states,
this percentage share in the SDP ranged from 6.9 per cent
(Uttar Pradesh) and 19.1 per cent (Andhra Pradesh) in
1988-89.
Table 3.16 depicts the growth of per capita
revenue development expenditure of Indian states during
1969-70, 1980-81, 1988-89, both at current and constant
prices. In real terms, Assam, Gujarat, Haryana, Jammu and
Bourcrt Rssarve Bank of India Bullet in, 1969-70 to 1988-89. lot. I 11 Show tk pwcmtaga * b r a of rnvmue exp.nditurr on aqrlcultura i n
s ta t# D w n t i c Product. 8 Ohon tk prcantage s b r a of ravanue axpendihra n lur icu l tura i n
Total &VM Lxpmdlturr.
: 19-70 1 1 w 1W-m 8. B b t n I__# b. Ihr c w i b : Rt k t R i c n I At h t n t P r i c n : Y O w m t Rlcn I At b s t n t Rirn
I lln bl I I Rr capita 1nd.x of: hr capita 1nd.x of : Rr caplta I r k of : hr c w i t a 1nd.r of l [ i n bl %or& I ( i n bl Errnth : ( i n kl b d h : ( i n bl h t h
11 hhua&trhtn
U llnipx
1s kq ta lya
I4 kqa1Ud
I5 Orilia
i h blab
17 b a n t t m
I8 Sikki l
19 T r i l W
m I r i p u a
21 Uttrr R u h h
P k t anprl
R11 btn
of time, viz., 1969-70, 1980-81 and 1988-89. The aggregate
expenditure of all the states has increased from Rs. 13,864
lakhs in 1969-70, to Rs. 2,36,866 lakhs in ,.1980-81 and Rs.
4,23,270 lakhs in 1988-89, nearly, an increase of 30 times.
The highest expenditure was incurred by Maharashtra Rs.
2,354 lakhs in 1969-70, Rs. 32,223 lakhs in 1980-81 and Rs.
76,203 lakhs in 1988-89. The lowest expenditure was
incurred by Nagaland (Rs. 11 lakhs), Sikkim (877 lakhs), and
(Rs. 178 lakhs) in 1969-70. Among the special category
states, the percentage share in the SDP ranged from 5
(Sikkim) to 13 (Jammu and Kashmir) in 1988-89. Among the
other states it ranged from 2.9 per cent (Madhya Pradesh) to
0.6 per cent (Uttar Pradesh) in 1988-89.
Table 3.22 presents the growth of expenditure on
Agriculture per head of Indian States during 1969-70, 1980-
81 and 1988-89 both at current and constant prices. At
constant prices, Assam, Haryana, Jammu and Kashmir,
Maharashtra, Nagaland, Orissa, Punjab, Tamil Nadu and West
Bengal incurred expenditure above the all-states per capita
of Rs. 2.53 in 1969-70; Gujarat, Haryana, Himachal Pradesh,
Jammu and Kashmir, Karnataka, Kerala, Madhya Pradesh,
and Tripura incurred a higher expenditure than the all-
states per capita expenditure of Rs.12.80 in 1980-81; and
Assam, Gujarat, Haryana, Himachal Pradesh, Jammu and
T I L E 3.23, REVENUE EXPEIDlTlRE 01 INDUSTRIES P lNDlW STRTES WR116 19hP-70, IM RYD 1N8-89
(Rupees i n L-I m
Smlr SI. S ta tes -...-.----.---------------....----.--..--------.---~-~-~-~-- No. I969 70 1980-81 1988-89
I bndhrr Pr rd rsh I 9 3 10.0611l 1,203 10.2011l _ 7,494 lO.5Ol l l 10.7811 11.0011 l I . 8 O l t
2 Assre 113 10.2011l 701 10.30111 1,288 10.70111 11.1011 l l . 9 O l l (3.0511
3 B i h r r 250 10.09111 1.646 10.201Il 8.145 10.30111 VAQ 1 S u j r r i t 179 10.08111 1,985 10.301l l ;1223' 1b.30111
11.0011 12.1011 ( I . h b l l 5 Hr ryanr 85 IO.OPll1 576 10.2011l 1,259 10.201l l
11.2011 11.4011 10.931t h H i s r c h r l Prrdesh 439 10.70111 2,654 11.6OIl8
15 O r i s s r ' 9 0 10.08)11 621 10.2011l 4,083 10.60111 10.8011 11.10l l 12.5311
Lh Punjab 237 10,15111 I 9 5 1O. lO i I t 1,573 10.10111 12.2011 10.9011 10.8811
I 7 R r j a s t h r n 40 ( 0 . O i ) I l 1,741 10.40111 3,295 10.30111 (0.2011 12.5011 11.4011
19 S i k k i e 101 (3 .801I l 173 11.30111 13.3011 11.6711
I 9 T r a i l Nrdu 380 (0.15111 2,060 (O.3OlI l b,213 10.301l l 11.30Il l l . l O l 1 (1.8011
20 T r i p u r a 212 10.80111 8,263 11.40111 12.0011 123.518
21 U t t r r Prrdesh 297 10.0611l 2,135 10.20111 7,289 10.10111 10 .VO~l (1.0018 11.2711
22 Y l s t k n q r l 452 10.13111 15,072 10.30111 4,8M 10.20111 11.7018 113.5011 11.401
AIL S t a t e r 3,224 37,284 89,826
Source8 Reserve Bank o f I n d i a Bulletin, 19h9-70 t o 19BB-89 Ibb I 81 Bhar U* percentage share of rav*nue expend i tu re an' i n d u s t r i e s i n
8 t r t a b u s t i c Product. I 8 h a th percent rqe share o f revenue * x p m d l t u r e on i n d u s t r i e s i n
lot11 L w w f r p m d i t u r e .
102
TW 3.241 arm o RWLF mec~m a m l e m KW (F IY)IMI DPKS w i t s 1969-10, i~ RO 1wa-m lin hlpn)
1 19610 1 1 W {-8
1wa-m 8. S t r k Y1. IRr cwltr I Pt DITrnt R l c n I Rt Cmstmt Pricn I Pit b rmt R k n : Rt Cm~lnt R i r n
I Iln bl I I Rr capih 1-x dl Rr capitr Ir&r of : Rr w i t r Ird~x d I Rr capltr lndn of I lln bl h d / (in bl hl : (in bl kmih I lin bl kmih
h r c e : R n s r v e Bank of Ind ia Bu l le t in , 1969-70 t o 1988-89 h i e I I1 Shw the parcmt rqe s lu r * of revenue expenditure m ade in in t ra t i ve
s e r v i c n i n State Bamestir Product. 1 Show tM prcen tape share of revmue erpendi ture m a d e i n i s t r r t i v e
u r v i r . r la lotrl Wvnw Ex@iture.
110 TRSLE 3.28: SRWTH OF PER CbPlTb REVEWE EXPENDITURE 01 ADI(IY1SlRATIVE SERVICES OF I N D I M SIRIES
WRIYG 1969-70, l W - 8 1 AND IPW-89 ( I n R u p e s l
1980-01 1988-80 .................................. .................................... At c u r r e n t A t constant I t c u r r e n t I t constant
81. S ta tes 1969-70 p r i c e s p r i c e s p r i c t r p r i c e s no. ------- ---------------- ---------------- ---------------- ------------------
P l r Per Indea Per Index PC lndmx P t r Index c a p i t a c a p i t a of c a p i t a o f capit#' o f c a p i t a o f
( i n Rs.1 ( i n Rs.1 G r w t h ( i n Rs.1 Growth ( i n Rs.1 Bronth ( i n Rt.1 Browth
1 . A n d h r a P r a d e t h 8.1 22.5 277 8.3 102 52.1 643 11.3 130
2. b s ~ a t 11.8 26.9 228 9.9 84 73.8 625 16.0 135
3. B ihar 4.7 18.1 385 6.7 143 52.3 1112 11.4 242
4. W a r a t 7.8 28.4 364 10.5 135 61.1 783 13.3 170
expenditure of Rs. 13.80 in 1988-89. The inhex of growth of
administrative expenditure of all the states increased from
308 per cent in 1980-81 to 860 per cent in 1988-89, while at
constant prices it went up from 113 per cent in 1980-81 to
186 per cent in 1988-89.
From the above analysis of the trend and growth of
state expenditure , it can be inferred that expenditure on
various items has shown an abnormal increase in nominal
terms, while the growth in real terms is slower than the
nominal growth. This may be attributed to the rising trend
in prices and growth of population.
The revenue expenditure of the state government
has shown a rapid increase than the capital expenditure,
because of the low capital formation. The socio-economic
expenditure on education, health and other services shows an
irregular pattern due to the change in the activity of the
government, change in the policies of political parties in
power, industrial changes, urbanisation, and finally
economic development.
EWl'ES AND REFWENCES
1. Hicks, U.K., Develo ment Finance Plannin and Control Clarendon Press, 0x:ord university , 196?, 'p.18.-'
2. Wagner Adolf, Three extracts on Public Finance Classics in t h a e , d T ~ ; ~ c k ~ f A ~ u b l i ~ a n ~ s . , - - - - - - - - Musgrave. F;A.--- ----- - Macmillan Co. Ltd.. London, 1958, p. 8.
3. Peacock, A.T. and Wiseman, J . , g:o_wm of Public Expenditure in United Kingdom, Oxford ~niverCi%~-FFe6S; London, 1961, p. 6.
4 . Williamson, G., "Public Expenditure and Revenue - An International Comparison," Manchester School of Economics and Social Studies, 1961, p. 47.
5. The expenditure figure is deflated by wholesale price index.
6. Special categary states conslsts of Ilimachal Pradesh. Jammu and Kashmir, Manipur, Maghalaya, Nagaland, Sikkim and Tripura.