Researcher ORCID Identifier

https://orcid.org/0009-0005-0855-298X

Graduation Year

2025

Date of Submission

12-2024

Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Ricardo Fernholz

Rights Information

© 2024 Vedant Relia

Abstract

India’s ambition to become a developed nation by 2047 hinges on addressing persistent challenges like poverty and unemployment. Education, particularly government-funded initiatives, offers a path to breaking this cycle, aligning with the Solow Growth Model, which emphasizes productivity and technological progress as drivers of long-term growth. This study examines the relationship between state-level per capita income growth and state-level government expenditure on education across Indian states, using a fixed effects regression to account for state and temporal heterogeneity. Unlike prior studies conducted at the national level, this analysis focuses on state-level dynamics and incorporates lagged terms for variables like government expenditure on education, literacy rate, education completion and net capital formation growth. The findings reveal that literacy rate is the only positively significant variable with a one-year lag, highlighting its immediate impact on economic growth. The results challenge previous literature, underscore the importance of fixed effects models, and emphasize the role of net capital formation in shaping sustainable policymaking for India’s diverse economic landscape.

This thesis is restricted to the Claremont Colleges current faculty, students, and staff.

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