Abstract:-
A macroeconomic framework integrating growth, distribution and human development with social spending as a crucial link provides an alternative view for conceptualizing fiscal policy for India. In policy formulation, the growth potential of social spending is ignored while concerns about fiscal implications of social spending are overstated. Using a demand-side macro model incorporating necessary supply side features for the Indian economy, the growth implications of social spending is demonstrated. The results indicate that a combination of policies on social sector expenditure, along with policies on income redistribution are both growth-promoting and self-financing in nature.