The purpose of the present study is to examine the effect of government expenditure on economic growth in India over a period from 1991 to 2010, with a particular focus on sectoral expenditures. Five key sectors were preferred: (security, health, education, transportation, and communication, and agriculture.). The variables were tested for stationarity and co-integration analysis using the Johansen co-integration technique. Error-correction test was also performed. The results shows that in the short run, expenditure on agriculture was found to be negatively related to economic growth. The impact of education, though, also negative, was not significant. The impact of expenditure on health was found to be positively related to economic growth. Expenditures on national security and transportation and communication were also positively related to economic growth, though the impacts were not statistically significant. It is possible that in the long run, expenditure on education could be positive if brain drain could be checked.

Key Words: Government expenditure; economic growth; error correction; co-integration; India.