V Through our analysis, we tried to find the main

components/reasons of the sub-national

governmentsǯ investment spending.

V We went through various state governmentsǯ

websites and literature related to their working
and concluded that there were basically 12
important components of the spending done by
them.
V Rnvestment spending in subs national
governments depends on:
V Tax revenue (per capita).
V Public per capita expenditure on social and
economic development
V Total revenue and GSDP ratio
V Per capita development expenditure
V Per capita expenditure on non development
services.
V Education, medical and health expenditure.
V ont..

V Debt to GSDP ratio

V Outstanding debt of states
V Debt as percentage of revenue
V Revenue surplus or deficit.
V Primary and fiscal deficits of states.
V Non tax revenue.
V We have made use of the log-log model or double log
model.
V The model formulation is:
lnYit = Ʌ'1 + Ʌ'2 lnX2,it + Ʌ'3 lnX3,it + Ʌ'4 lnX4,it +
Ʌ'5 lnX5,it + Ʌ'6 lnX6,it + Ʌ'7 lnX7,it + Ʌ'8 lnX8,it +
Ʌ'9 lnX9,it + Ʌ'10 lnX10,it + Ʌ'11 lnX11,it + Ʌ'12 lnX12,it + ûit
V Yi represents the Rnvestment spending of the ith
value of the sample.
V Xj,i is the ith value of jth explanatory variable of the
sample.
V Ètǯ represents the time period

V Ʌ' k is the estimator of population parameter Ʌk.

V Ʌ' k where k = [2,11] represents elasticity of Yit,

elasticity = proportionate change in
Yit/proportionate change in Xk,it.

V To account for other factors, there is a stochastic

disturbance term Èuǯ in the model.
V Why this model??

V To conclude our analysis, we collected data of the

12 components (mentioned earlier) of 5 states,
namely, Andhra Pradesh, Arunachal Pradesh,
Assam, Bihar and hhattisgarh of the fiscal years
2006-07 & 2007-08 .