Rural Public Expenditure and Poverty Alleviation in India: A Spatial Econometric Analysis

Abstract

In India, a pivotal strategy for poverty reduction involves consistent and substantial public financial investments. This study utilizes spatial econometrics to analyse the structural disparities between rural public expenditures (including education, health, social security, infrastructure, and living environment) and poverty in India spanning from 2000 to 2020. The findings underscore notable variations in the poverty reduction impact of government spending. Expenditures on education, healthcare, social security, and infrastructure demonstrate positive effects on poverty alleviation, while spending on the living environment lacks significant impact on poverty reduction. Moreover, the study reveals that government spending not only facilitates poverty reduction in specific regions but also positively influences economically and geographically similar areas. This study suggests that the need for future research to explore in-depth how the effectiveness of government spending in reducing poverty varies based on its structural components. Consequently, the insights gleaned from this research hold substantial implications for shaping targeted poverty alleviation measures in India through well-informed government spending policies.