Authors: Dr. Sushma A R
Abstract: This chapter examines the relationship between economic growth, public expenditure on education and higher education enrolment as a process of human capital formation in India and Karnataka. Using annual time-series data for the period 2000–01 to 2020–21, Gross Domestic Product (GDP) and Gross State Domestic Product (GSDP) are treated as proxies for the wealth of the nation and the state, while alternative measures of public education outlays (central, state and overall expenditure on education) capture investment in education. Enrolment in higher education—disaggregated by gender at the all-India level—serves as an indicator of human capital formation. The study employs compound annual growth rates to analyse long-run trends, Augmented Dickey–Fuller tests to verify stationarity and Johansen co-integration techniques to explore long-run equilibrium relationships between educational spending and enrolment. Results for India show that education expenditure has grown at a slightly higher pace than GDP, indicating a strengthening fiscal commitment to human capital. Higher education enrolment has expanded significantly, with female enrolment growing faster than male enrolment, signalling progress toward gender inclusivity. All key variables are integrated of order one, justifying the use of co-integration analysis, which confirms a stable long-run relationship between expenditure on education and total higher education enrolment. The Karnataka analysis, based on analogous variables, complements the national perspective by highlighting state-level patterns in the linkage between economic growth, education financing and human capital formation. Policy suggestions emphasise enhanced public investment, gender-focused interventions, regional equity and quality improvements in higher education to sustain inclusive growth.
DOI: http://doi.org/10.5281/zenodo.17777320
