Faculty Coordinator: Dr Aswathy Rachel Varughese

Faculty Team: Dr. Renjith PS, Dr. U P Anil, Dr. V P Nirmal Roy,

Public expenditure plays a decisive role in shaping development trajectories, especially in developing economies where market failures, under-provision of public goods, and widespread inequality necessitate an active fiscal role for the state. Theories of public expenditure underscore not only the growth-enhancing role of public spending but also the need to strike a balance between allocative efficiency and political economy considerations. Public expenditure, in the context of a developing economy, contests for a more proactive role of government, given the constraints on private sector-led development and the need for long-term investments in health, education, and infrastructure. Meanwhile, the governments need to be cognizant about the size, quality and efficiency, and sustainability of spending. In India, public expenditure has averaged around 15 per cent of Gross Domestic Product (GDP) in recent years. State governments are the principal agents of development spending, particularly in sectors like education, health, and rural infrastructure.

The research pillar on public expenditure aims to examine the effective role of government, particularly in developing economies, in meeting the broader developmental needs. Meanwhile, the pillar focuses on the size, composition, and quality aspects of spending, its efficiency, and effectiveness. The need for rationalising expenditure to prevent leakages,  areas where the rationalisation is required, and the mode of achieving effective rationalisation will be dealt with in this pillar. Financing for development, inclusive and gender-responsive budgeting, as well as the changing expenditure policies under evolving macro-fiscal and political contexts in India, at the sub-national levels and comparable economies, remain other important focuses of this research pillar at GIFT.