International Journal of Transformations in Business Management

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Abstract

Public Expenditure on Social Services and Human Development in Andhra Pradesh: An Assessment Using the UNDP Expenditure Ratios

M. K. Lakshman Kumar

*Research Scholar, Department of Economics, Sri Krishnadevaraya University, Ananthapuramu

Prof. G. Venkata Naidu

Professor and Head, Department of Economics, Sri Krishnadevaraya University, Ananthapuramu

84-96 Vol: 15, Issue: 1, 2025
Receiving Date: 2025-02-11
Acceptance Date: 2025-03-17
Publication Date: 2025-03-18
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http://doi.org/10.37648/ijtbm.v15i01.010

Abstract

Public spending on social services is the main fiscal channel through which a sub-national government can influence human development. This paper assesses the fiscal commitment of Andhra Pradesh to human development in the ten years after state bifurcation (2014-15 to 2023-24), using the four expenditure ratios proposed in UNDP's Human Development Report 1991: the Public Expenditure Ratio (PER), Social Allocation Ratio (SAR), Social Priority Ratio (SPR) and Human Expenditure Ratio (HER), with indicative norms of 25, 40, 50 and 5 per cent. Using budget data and Gross State Domestic Product (GSDP) estimates, the paper compares two five-year sub-periods (2014-15 to 2018-19 and 2019-20 to 2023-24), estimates linear trends, and decomposes the change in HER. PER fell from a mean of 22.6 per cent to 17.9 per cent and exceeded its norm only in 2014-15. SAR rose from 27.9 to 37.5 per cent and crossed its norm only in 2023-24 (revised estimates). SPR fell from 57.4 to 49.2 per cent and dropped below its norm in 2022-23 and 2023-24. HER averaged 3.6 per cent and 3.3 per cent in the two sub-periods and never reached 5 per cent; the difference in sub-period means is not statistically significant, but the ten-year trend (-0.09 percentage points a year) is. A decomposition shows that the shrinking size of the budget relative to GSDP and the erosion of the priority-sector share outweighed the rise in the social-services share. Raising the social-services share alone is therefore insufficient; progress towards the norm requires protecting education and health spending within a larger and fiscally sustainable expenditure envelope.

Keywords: public expenditure; human development; social allocation ratio; social priority ratio; human expenditure ratio; Andhra Pradesh; state finances

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