The paper aims to investigate if the security expenditure impacts the national growth among SAARC countries and tries to find correlation between Defence Liability and GDP growth rate of the nations. The paper uses time series data of 30 years from 1988 to 2018 for five SAARC countries of India, Bangladesh, Sri Lanka, Pakistan and Nepal. The paper finds positive association between Defence Liability and GDP growth rate in case of India, Pakistan and Nepal. The result in case of India indicates that every 1% increase in Defence Liability would fetch about .058% increase in GDP growth. The paper also evaluates Granger Causality to find that Defence Liability only in case of India Granger causes GDP growth rate but reverse is not true.
Key words: Budget constraints, Central Government Expenditure, Defence Liability, GDP growth rate.
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