Empirical Analysis of the Relationship between Unemployment and Economic Growth in India: A Study Using Okun's Law

Abstract

The study examines the correlation between real GDP and unemployment in India, utilising the Okun’s Law structure. Unemployment has been a critical challenge in various developing nations, demanding concerted efforts for mitigation. Okun's Law stands as a pivotal economic principle aimed at comprehending the intricate relationship between unemployment and its consequential impact on a country's Real GDP growth rate. Therefore, this research paper aims to primarily investigate the administration of Okun's Law within the context of India's economy spanning a three-decade period from 1992 to 2022. The central focus revolves around assessing whether Okun's Law remains empirically valid within the Indian economic landscape over this extended timeframe. Additionally, the study aims to look forth and understand the specific periods or instances where deviations from the expected relationship occurred and also seeks to elucidate the underlying factors contributing to these deviations. Utilising empirical data and rigorous statistical analysis, this study undertakes a comprehensive examination of India's economic performance vis-à-vis Okun's Law. The analysis extends to explore the divergence from this economic principle during certain temporal periods, aiming to uncover the nuances and factors behind these deviations