ABSTRACT              

The goal of this research is to investigate empirically how government expenditure contributes to economic growth in Jammu and Kashmir. Economic growth is an important factor for economic development of a country. The relationship between public or government expenditure and economic growth has been debated for decades and has not clearly stated yet. Moreover, the classification of government expenditure indicates that only housing sector expenditure and development expenditure significantly contribute to a lower economic growth. Education, defense, healthcare, and operating expenditure do not show any significant evidence of its effects on the economic growth. Government spending has been used extensively as fiscal policy by the government in many countries, but its effects on economic growth is questionable. The difficulties of assessing the effect of public intervention in the underdeveloped economies may be summed up in the preposition that underdeveloped countries are caught in a contradiction, a virtual vicious circle, thus: the underdeveloped countries are such because the domestic and international market mechanism needed to initiate the development process. Public expenditures have played an important role in shaping the physical and human capital over a period of time.  This paper will try to highlight that appropriate public spending can be effective in promoting economic growth, even in the short term.