Educational Expenditure Needs of Large Indian States: A Normative View

Utilizing the pooled data for 15 large Indian states spanning over six years from 1992-93 to 1997-98, this study employs panel data modes to estimate the normative (average) levels of expenditure on primary, secondary and higher education for providing the average standards of educational services. The findings of the study revel that the actual spending on educational services in low-income states is found to be lower than their 'needs'. This finding implies that the existing fiscal equalization mechanism has not been effective in offsetting the revenue and cost disabilities of the poorer states in India.