STRUCTURAL BREAK ANALYSIS OF PUBLIC EXPENDITURE GROWTH IN INDIA

After the Keynesian era, most developing nations are using deficit financing as a tool of development. For this, they are continuously increasing their public expenditure, and due to that their public debt is also increasing. Wagner’s law also deals with the increasement in public expenditure due to increasing state activities. This paper shows that there is a continuous increasement in public expenditure in India in the past five decades (1970 to 2020). The Bai Perron (2003) multiple breaks analysis shows that there are three structural break years in public expenditure growth in India in 1996, 2006, and 2013 due to the relevant reasons in each break year respectively.