Impact of Public Expenditure on Education in Chhattisgarh

 Archana Sethi

School of studies in Economics, Pt.Ravishankar Shukla University Raipur.

 Abstract

This paper objective to investigate the correlation between public spending on education and the growth of the state of Chhattisgarh. Time-series data spanning from 2000 to 2021 was utilised. Public expenditure has several effects in economy. It can increase economic growth. It can increase social welfare. It is directly expected education is helps Positive Social change of citizen. The result shows that total public expenditure and Education expenditure is highly and statistically significant on economic growth indicator such as GER and DOR in primary level in Chhattisgarh.Public expenditure helps in achieving equitable distribution income and promote growth and welfare. The findings indicate that total public spending and education spending have a statistically significant and positive impact on economic growth indicators like the state's Gross Enrollment Ratio (GER) and the percentage of primary school dropout children (DOR) at the primary level. Education is directly expected to contribute to citizens' positive social transformation. The study's findings show that public spending on education and economic growth are correlated over the long term. Over time, there is a found unidirectional causal relationship between public education spending and Gross State Domestic Product (GSDP).

Keywords: Economy, Public Expenditure, GER, DOR. State economy, Education, 

 Introduction

After reviewing the literature, it was found that several scholars have examined the connection between public spending and the expansion of various national and international economies, but only a small number of these analyses have been conducted at the state level. This study will pay particular attention to the economy of the Chhattisgarh state to disclose the spending and growth patterns of the state since its founding and to show the relationships between factors that make sense. Additionally, the study will provide a road map for other states that were created on November 1 of the same year as Chhattisgarh.

 Since its establishment on November 1, 2000, the economy of Chhattisgarh State has seen a growing growth trajectory (Figure 1.1). The data is shown in Table 1 that is provided below, as well as in Figures 1 and 2, which show that the state's total expenditure and its gross state product have been increasing over the past 20 years. It increased to Rs. 47862.29 of GSDP and Rs. 9291.53 for government expenditure in 2005, with growth rates of 85.18% and 69.82%, respectively, in the first five years of its inception from Rs. 25846.16 crore and Rs. 5471.48 crore of overall government expenditure.

 Objectives of the research

1. To examine the composition, distribution, and trajectory of governmental spending and

    economic expansion since the founding of the state.

2. To reveal the logical connection between the variables.

3. To examine government expenditures and their impact on education.

 Research and Methods:

The data used in this analysis spans the years 2001 through 2020. Data for the GSDP was taken from the Chhattisgarh government's Directorate of Statistics and Planning Department. The information about public spending was collected from the Chhattisgarh government's finance department website. Additionally, we used data from the Ministry of Statistics and Planning Implementation (MoSPI). To steer the investigation in the appropriate direction, a variety of statistical methods have been utilized to compute the average, percentage, and ratios of the variables, including correlation and regression analysis.

 Hypothesis

1. H_{0 ;} There is no significant impact of Public Expenditure on Education factors (GER and DOR Primary level.

 H_{1 ;} There is significant impact of Public Expenditure on Education factors (GER and DOR )Primary level.

 2. H_{0 ;} There is no significant impact of Education Expenditure on Education factors (GER and DOR) Primary level.

 H_{1 ;} There is significant impact of Education Expenditure on Education factors (GER and DOR) Primary level.

Table -1

Gross Domestic State Production and Total Public Expenditure of Chhattisgarh

Sources: Finance department of Chhattisgarh 2017.

Alternatively, it shows that the government expenditure as a percentage of GSDP was 21.2% in 2001–02 and increased to 25.2% in 2003–04 after that. However, even though the percentage of GSDP spent on government expenses has not increased significantly in a relative sense, the absolute value still exhibits an upward trend through 2015, with an average annual growth rate of around 26%. Since 2001–2002, the proportion of developmental spending has grown, now making up about 78% of overall spending. Despite being named the best fiscally performing state by the RBI and the centre in 2015–16, "the human development of the state is not very significant" (Ashish Kumar Mishra, 2017).

The data set from 2001 to 2020 shows an average growth of 22.86% in government spending as a percentage of the gross domestic product. Government spending increased at a relatively high pace in 2003, around 28%, then decreased to 4% in 2004, increased to 26.71% in 2006, and then began to drop until 2020 (Figure 3). GSDP has grown at an average annual pace of 14.13% over the past 20 years, while government spending has grown at an average annual rate of 14.59%. When compared to the national average, the average per capita GSDP and expenditures are below average at Rs. 48172.40 and Rs. 12588.25, respectively.

 In each of the corresponding years, the government's spending as a share of GSDP stays stable between 20 and 25%. Since the state's GSDP is calculated in nominal terms, which incorporate inflation, there is a larger difference between the two curves. However, if we consider the GSDP as a whole, it is growing faster than government spending overall.

The GSDP growth rate fluctuates a lot between gains and reductions, showing no discernible trend. For the studied period, there is a rising tendency in the per capita GDP; however, this development is gradual.

 FORMULA FOR RECEIPTS:

Government receipts can be divided into two categories: revenue receipts and capital receipts. Revenue receipts are those receipts that do not burden the government or give rise to a claim. Tax revenue and non-tax revenue are the two categories. Taxes are mandatory payments that individuals and businesses must make to the government without receiving any immediate benefits in return. There are two sorts of tax revenue: direct tax and indirect tax. To put it another way, capital receipts are non-recurring receipts that result from a corporation or government's financing and investment activity. The following table 2 displays the state government's revenue structure.

Table 2 shows an increasing tendency for revenue and capital receipts, while capital receipts for the period of 2001 to 2020 show no trend and occasionally increase and decline.Although the trend structures for the various variables (revenue and capital receipts) varied, the overall trend for receipts from 2001 is readily seen in figure 2.2. According to the data, total receipts in 2001 were Rs. 5582.81 crore, of which Rs. 1207.12 crore came from capital receipts and Rs. 4375.69 crore from revenue receipts (including tax and non-tax revenue).

Table-2

Revenue and Capital Receipts

Sources: Finance department of Chhattisgarh 2017.

 Additionally, in 2006–07, when capital receipts were extremely low at Rs 196.54 crore compared to income receipts of Rs 11453.24 crore, the overall receipt increased to Rs 11649.79 crore. In 2010–11, the capital receipt was Rs. -769.06 crore. In terms of total receipts, Chhattisgarh's economy relies heavily on revenue sources.

 EXPENDITURE STRUCTURE:

Once more, the Chhattisgarh economy's expenditure pattern has the same pattern as its revenue receipts. Between 2001 and 2010, total spending, which consists of revenue and capital expenditure, grew steadily, and after that, it grew at an increasing rate.

In the same way, revenue expenditures (which include expenses for paying salaries, wages, pensions, subsidies, and interest) take the same course. Since the state's founding in 2001, revenue spending has climbed from Rs 4914.36 crore to Rs 70032.84 crore between the years of 2001 and 2020, or around 14 times. Additionally, capital expenditures (the cost of building assets such as schools, colleges, hospitals, roads, bridges, trains, airports, and seaports, etc.) were Rs. 476.26 crore in 2001 and would be Rs. 9024.19 crore in 2020, or almost 20 years later (table 3).

Table-3

Total Expenditure Revenue expenditures capital expenditure

Sources: Finance department of Chhattisgarh 2017

In addition to all of these studies, the Chhattisgarh economy is having trouble finding investments that will create assets rather than just preserve them. Because Chhattisgarh has a wealth of mineral resources that can enable the necessary investment to be realized, the government should raise capital expenditure (capex) as it fosters greater economic growth.

STRUCTURE OF REVENUE AND FISCAL DEFICIT, LOANS, AND ADVANCES

Table 4 displays year-by-year revenue, fiscal deficit, loans, and advances for the state of Chhattisgarh. The data for loans and advances demonstrates an increasing trend up until 2014, after which it declines to a very low position in 2015 and then slowly increases. While advances are short-term credit facilities given by financial institutions to businesses for a duration of one to two months or up to a year, and they are fully repayable at the end of the term, loans are long-term financial support given by banks and financial institutions to individuals or business firms.

Table-4

Loans and advances revenue deficit & fiscal deficit

Sources: Finance department of Chhattisgarh 2017.

The revenue deficit, which is the difference between revenue receipts and revenue spending, may be seen in table4 It was initially somewhat negative up until 2006, after which it turned positive until 2019 and then started to decline. Due to the pandemic (Covid-19), it was high in 2020 because the government's revenue expenditures were greater than its revenue inflows. Again, the budget deficit was quite low from 2001 to 2012, but after that it rose significantly. It was large in 2019–20, totalling around Rs. 18064.63 crore, and in 2020–21, totalling Rs. 15822.38 crore, both due to the pandemic. Looking at the plot, Figure 4.2 shows that the fiscal deficit has been expanding from 2011–12 to 2020–21.

Table 5 below shows the compound growth rate of education items from 2000–01 to 2016–17. The compound growth rate is used to find out how much the value of the variables is increasing. The compound growth rate of total public expenditure is 15.88 percent. The compound growth rate of total public expenditure on education is 14.61 percent. The compound growth rate of the Gross Enrolment Ratio (GER) in primary-level education is 4.57 percent. The compound growth rate of DOR at the primary level is -5.04%, which is showing a declining trend. The compound growth rate of gross domestic product (SGDP) is 14.48 percent. The compound growth rate of expenditure on education per capita is 12.20 percent. It is clear that the largest increase in education items is due to the increase in total public expenditure by 15.88 percent, and the compound growth rate in the number of out-of-school children at the primary level is on a declining trend.

Table-5

Compound Growth Rate of Education Factors

Sources: Finance department of Chhattisgarh 2017.

The table 6 shows that education has the highest variance coefficient of 81.83 per cent of the total public expenditure. As the variance coefficient increases, more changes occur. The variance coefficient is as follows, 71.87 per cent on total public expenditure, 26.17 per cent in total enrolment rate (GER) in primary level school education, 67.92 per cent in SGDP, 69.40 per cent in per capita education. The lowest Primary School Leaving (DOR) is 21.36%. It means more stability and uniformity in growth.

Table-6

Coefficient of Variance of Education Factors

Sources: Finance department of Chhattisgarh 2017.

The table 7 show correlation coefficient between total public expenditure and public expenditure in education in the above table is + 0.918, which shows a high degree of positive correlation. A correlation of + 0.706 between the Gross Enrolment Rate (GER) indicates a mid-level relationship. The correlation coefficient of - 0.877 among primary school dropout children (DOR) indicates a high level of negative correlation. There is a high level of positive correlation of + 0.999 between total public expenditure on education and expenditure on education per capita and a high level of positive correlation of + 0.884 between education and GSDP.

Table-7

Correlation Coefficient between Education expenditure & Education factors

The table 8 correlation coefficient between total public expenditure and public expenditure in education in the above table is + 0.918, which shows a high degree of positive correlation. The correlation coefficient between total public expenditure and the Gross Enrolment Rate (GER) in primary level school education is + 0.896, indicating a high level of positive correlation. There is a high level of negative correlation of - 0.970 between total public expenditure and (DOR) out of school children. There is a high level of positive correlation of + 0.908 between expenditure on education per capita and. There is a high level of positive correlation of + 0.994 with GSDP.

Table -8

Correlation Coefficient between Total public expenditure& Education factors

Table 9

Regression Coefficient of Education Factors in Chhattisgarh

(Education expenditure as a independent variable)

Table 9 Assuming the total public expenditure on education as an independent variable, the regression coefficient was calculated to find out its impact on other components of education.

1) The value of the regression coefficient (R) 0.706 and (F) between the total public expenditure on education and the total enrolment rate (GER) in primary school is 13.9. At the significance level of 95%, 0.05 < + 13.9, the null hypothesis is rejected. GER has no effect on total public expenditure on education.

2) The value of the regression factor (R) 0.877 and (F) between the total public expenditure on education and the number of primary school dropouts (DOR) is 46.5. 95% meaningfulness 0.05 < + 46.5 null hypothesis is rejected. There is no effect of DOR on total public expenditure on education and primary school dropout children whereas DOR has a meaningful impact.

3) The value of the regression coefficient (R) 0.999 and (F) between total public expenditure on education and expenditure on education per capita is 63.95.  95% is evident from 0.05 < + 63.95 at the significance level The null hypothesis is rejected, there is no effect on total public expenditure on education and expenditure on education per capita, while it has a meaningful effect.

Table 10

Regression Coefficient of Education Factors in Chhattisgarh

Total Public expenditure as an independent variable

1) The Table 10 show coefficient of regression (R) between total public expenditure and the Gross Enrolment Rate (GER) in elementary level education is 0.896 and the value of (F) is 57.0. With 95%meaningfulness 0.05 < + 57.0, it is clear that the null hypothesis is rejected. Total public expenditure has no impact on the Gross Enrolment Rate (GER) in primary level school education whereas GER has a meaningful impact on public expenditure.

2) The total public expenditure and the number of elementary school dropouts (DOR) has a regression coefficient (R) of 0.970 and a value of (F) of 225. With 95% meaningfulness 0.05 < + 225, it is clear that the null hypothesis is rejected. Total public expenditure has no impact on DOR while it has a meaningful impact.

3) The regression coefficient (R) between total public expenditure and expenditure on education per capita is 0.908 and the value of (F) is 65.6. With 95% meaningfulness at 0.05 < + 65.6, it is clear that the null hypothesis is rejected as having no meaningful effect on total public expenditure and per capita education while it has a meaningful effect.

Conclusion:

It is directly expected education is helps Positive Social change of citizen. The result shows that total public expenditure and Education expenditure is highly and statistically significant on economic growth indicator such as GER and DOR in primary level in Chhattisgarh. Government should push more expenditure of education. The study's findings show that public spending on education and economic growth are correlated over the long term. Over time, there is a found unidirectional causal relationship between public education spending and Gross State Domestic Product (GSDP).

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