India in 2007: A Year of Opportunities and Disappointments

This study attempts to explore the dynamic causal and inter-relationships among tourism, economic growth and energy consumption in India. This study covers the annual data from 1971 to 2012. This study applies the cointegration and generalised variance decomposition methods to verify the relationship. The bounds testing approach to cointegration and the Gregory–Hansen test for cointegration with structural break consistently reveal that energy consumption, tourism and economic growth in India are cointegrated. We find that tourism and economic growth strongly affects energy consumption in the long-run. Additionally, we also find that tourism and economic growth in India are inter-related, but the causal effect of tourism on economic growth is stronger than the other way around in both the short- and long-run. Therefore, this study concludes that the tourism-led growth hypothesis is valid but the energy-led growth hypothesis is invalid in India. With such findings, we can confirm that tourism is an important catalyst of growth to the Indian economy. Therefore, policy-makers should promote and expand tourism industry in order to sustain the process of economic growth and development in India.

The present study discusses the growth performance of agricultural and Economic Growth (GDP) in India. Close Relationship between agriculture performance and Economic Growth (GDP). Agriculture growth is one of the most important inputs for economic development. Agriculture production directly causes growth in GDP. Agriculture production plays an essential role in an economy on both demand and supply side. Economic growth in India has largely been associated with increasing Agriculture production. The causal relationship between agricultural performance and economic growth (GDP) in India were using time series from 1980 to 2014 were data gathered from (WB) world development indicator. The study were used Augmented Dickey Fuller (Dickey and Fuller, 1979) and to test for unit root and Granger model to test causality. On the other hand the causality relationships found that there unidirectional relationship were found between Agriculture performance and economic growth which is running from production to economic growth (GDP). Based on the findings, it is recommended that policies aimed at increasing the productivity of crops and Policy-makers should focus more attention to the Small and marginalized farmers. In this paper Granger causality tests were used to examine the relationship between growth performance of agricultural and Economic Growth (GDP).

This paper investigates the long-run equilibrium relationship between economic growth and trade openness in India during the period 1960-2018 using the asymmetric error-correction model with threshold cointegration. To evaluate the robustness impact of trade openness on economic growth under different regimes, we divide the full sample period into two sub-periods, i.e., pre-trade reforms period 1960-1990, and post-trade reforms period 1991-2018. The study indeed confirms the evidence of asymmetric cointegration between economic growth and trade openness in India during the period under evaluation and over the different sub-periods. The estimated asymmetric error-correction model exhibits a different speed of adjustment in trade openness in response to positive and negative economic growth shocks in the short-run. More specifically, during the pre-reforms period, deviations from the long-run equilibrium due to a relative increase in economic growth have a lower speed of adjustment in comparison to deviations caused by a corresponding decrease in economic growth in India.

The present study is aimed at exploring the relationship between insurance consumption and economic growth in India during 1990–2016. Annual insurance penetration, insurance density, and per capita GDP have been used to study the relationship between insurance consumption and economic growth by employing the Johansen cointegration technique. A vector error correction model is applied to study the short-term and long-term relationship between the variables. A one-way causality originating from insurance penetration to economic growth is revealed in the long run. Similarly, insurance density also causes long-term economic growth. Insurance penetration leads to short-term economic growth in India. However, economic growth does not cause insurance penetration or density in the short run as well as in the long run. The results empirically establish the relationship between the insurance industry and economic growth in India post-liberalization. The results could help policymakers to focus on enhancing the insurance industry’s performance in India to achieve higher economic growth. The existing literature on how insurance consumption and economic growth are related is focused on developed economies. It ignores the non-life insurance segment of the industry and has not taken a long time period to get a complete picture of the interrelationship. This is a novel attempt to investigate the causal relation between economic growth and the insurance industry’s growth in post-liberalized India.

A study of the impact of military expenditures on economic growth and development examines the differences in the results of previous studies which led to contradictory conclusions. The authors find that these differences are due to sample variations, specificational choices, and the different time periods examined. The data indicate that there is no consistent, statistically significant connection between military spending and economic growth. Augmentation of the models suggests that military expenditures neither help nor hurt economic growth to any significant extent. 2 tables.

This paper analyses the trend in economic growth and population transition in China and India during 1990–2018 through a comparative perspective. The analysis follows a decomposition framework which argues that economic growth has a pure demographic component and a pure economic component and it is the latter which actually contributes to improving the standard of living. The analysis reveals that most of the economic growth in China during 1990–2018 has contributed to improving the standard of living but a substantial proportion of economic growth in India has been the result of the demographic factors that contributed little to improve the quality of life of the people. China needs to explore possibilities of productive utilisation of the old people to sustain economic growth whereas India requires reinvigorating the economic system and accelerating population transition to improve the quality of life of its people. The paper concludes that in the context of human well-being, economic growth in India has been less spectacular than that in China.

PurposeThe purpose of this paper is to empirically analyze the impact of remittance inflows on sustained economic growth in India.Design/methodology/approachThis study has taken a time series dataset for the period of 1976–2021, and a nonlinear autoregressive distributed lag model technique (NARDL) has been applied to check the impact of remittance inflows along with other control variables, including broad money and service sector performance, on the sustained economic growth of India.FindingsThe results of the study indicated that in both the short and long runs, any positive shock in remittance inflows has a positive impact on the economic growth of India, while negative shocks do not affect economic growth.Practical implicationsThe economic policymakers of India can use the findings of the study by implementing remittance-friendly policies. Moreover, NITI Aayog, the body working toward achieving sustainable development goals (SDGs) in India, can also use this study as a reference while making strategies to achieve SDG.Originality/valueEconomic growth has always been an area of interest among economists, researchers and policymakers. However, achieving sustained economic growth requires an analysis of those factors that themselves have sustained performance over a long period of time and have the potential to sustain it over the upcoming years. This study has taken remittance inflows as one such factor and investigated its impact on the sustained economic growth of India. At present, there is an evident gap in the literature that very little attention has been given to sustained Indian economic growth. Moreover, there is no study available in which the nonlinear impact of different variables has been tested on the economic growth of India.

This study employs the extended Solow growth model to comprehensively examine the nexus between diverse forms of capital and labour force employment in driving the economic growth of India. It includes a range of capital types, including physical, human and infrastructural, as well as labour force employment across 17 major Indian states. The empirical investigation adheres to a structured methodology using panel data: first, a degree of homogeneity test is conducted for each panel. Second, the cross-sectional dependence (CD) test is examined across panels. Third, second-order panel unit root tests applied to the variables exhibit non-stationarity at their levels, while they attain stationarity upon taking their first differences. The final Solow growth model, which embodies panel fully modified ordinary least squares (FMOLS) and dynamic ordinary least squares (DOLS) models, is applied to examine the impact of various forms of capital and labour force employment on state-wise economic growth in India. Capital formation in the form of physical, human and infrastructural capital plays a crucial role in driving positive long-term economic growth across Indian states. Thus, revamping state-level fiscal coordination through efficient revenue mobilization and expenditure management is crucial for sustaining development. The study provides a nuanced understanding of the intricate dynamics influencing states’ economic growth in India, shedding light on the interconnected leading role played by capital formation and labour market dynamics in nurturing sustainable economic growth over the long run. It emphasizes the importance of infrastructure spending and investment in human and physical capital to achieve permanent and sustainable growth in India.

India is one of the largest producer and consumer of electricity in the world owing to being one of the most populous country in the world signifying the demand for electricity is only set to grow further. World has witnessed an era of economic growth aided pertinently by electricity consumption and growing demand. With FDI indorsed downright to this vital utilities sector, it becomes imperative to cognize the relationship of Electricity Consumption, Economic Growth and FDI in India. In this study we investigate the causal direction of relationship among Foreign Direct Investment, Electricity Consumption and Economic Growth in India by using time-series data for the period 1986–2021 and employing econometric models. We find two uni-directional causalities running from Electricity Consumption to Economic Growth and Economic Growth to FDI and a bi-directional causality between Electricity Consumption and FDI. The results of the study provide a novel perspective for policy makers while formulating policies related to the power sector and foreign direct investments in India. The focus of Policy makers should be on enabling electricity service providers to offer best services to commercial and non-commercial participants as it aids in Economic growth of the country. For enhanced economic growth a country like India must have good and world-class infrastructure, efficient and effective regulatory mechanism equitable for all stakeholders, an improved living standard for people of all economic strata and a stable, healthy business friendly environment coupled with policy stability through stable government.

In this paper, the relationship among economic growth, inequality and poverty between the post and pre reform period is shown. To capture the impact of th-is, we will take consideration the GDP at constant prices and on the other side we will take poverty ratio of both urban and rural area, poverty head count ration and number of peoples. It is well established now that growth and poverty have on undescribed relationship. Growth is necessary but proverty is not and, alone growth cannot riddle out poverty. The study examines the question of whether economic growth tends to reduce poverty, where using the most recent data available, the paper shows that an increase in the rate of GDP growth translates into a direct one-for-one increase in the rate of growth of average income of poor's. The economic growth also indicates that economic growth is essential for poverty reduction, especially when it leads to increase in employment and improvement in opportunities for productive activities among the people that are poor. The result obtained indicates that the positive change in economic growth is prone to poverty reduction. To therefore improve and sustain the rate of economic growth in India from which poverty could be reduced measures, such as, stable macroeconomic policies, huge investment in agriculture, infrastructural development and good governance are suggested. But the main focus of the paper is to show the casual relationship between economic growth and poverty. The study will cover that the initial level of economic growth will have significant impact on the reduction of poverty as per given duration. The objective in this present research paper is to check the status of relation among inequality, poverty and economic growth (in Terms of GDP) in India.

This study investigates both the symmetric and asymmetric relationships between infrastructure development and economic growth in India, using annual data spanning from 1991 to 2022. To measure infrastructure, an index of infrastructure development is created through the principal component method. To assess the potential linear and non-linear impact of infrastructure development on economic growth, both linear and non-linear autoregressive distributed lag (ARDL) models are employed. The ARDL results indicate that infrastructure development promotes economic growth both in the short and long run. The non-linear ARDL model confirms the existence of asymmetric effects, showing that positive shocks to infrastructure promote economic growth, whereas negative shocks impede growth. The negative shock has a stronger adverse impact on growth compared with the positive impact generated by the expansion in infrastructure. The Wald test further supported the presence of an asymmetric relationship between infrastructure development and economic growth in the long run. These findings highlight that infrastructure development is a key policy instrument for promoting sustained economic growth in India and also emphasise the urgent need for maintaining existing infrastructure. The study suggests that India should follow an infrastructure development-led growth strategy to achieve high and sustained economic growth.

The article investigates the relationship between economic growth and defence expenditure in India from 1970–1971 to 2015–2016. By using the Autoregressive Distributed Lag and Toda-Yamamoto Granger Causality approach, the empirical results find that defence expenditure has a positive and significant impact on economic growth in India. The study also finds that capital defence expenditure has a positive and significant effect on economic growth, while revenue defence expenditure does not have any substantial influence on it. The causality test confirms a bidirectional causality between defence expenditure and economic growth, while it finds a unidirectional causality that runs from capital defence expenditure to economic growth. The study suggests that defence spending, especially capital defence spending, should be encouraged to enhance economic growth in the Indian economy. JEL Classification: H56, O40, C32

This study focusses on three aspects of the association between human development and economic growth in India: (i) the pattern of the relationship between economic growth and human development in India at the national and state levels; (ii) whether economic growth was converging at the state level; and (iii) whether human development was converging at the state level. In the last two decades, India outperformed advanced and developing economies in per capita income growth and health and education indicators, propelling itself into the virtuous category (high-EG, high-HD). By employing data for 26 states and union territories (UTs) for three decades (1990–2019), a diverse pattern was observed in the relationship between economic growth and human development, with most of the states (16) in the virtuous category, and the others in three different categories. However, no clear pattern emerged from the dynamic movements in the last three decades, as there were cases of states moving from one category in one decade to another category in different decade. There was no evidence of economically weaker and low HD states catching up with economically well-off and high HD states, respectively. However, club convergence was occurring, i.e., economically weaker states were catching up with economically well-off states in the low-income, high-HD club. Economically weaker and low HD states can catch up with economically well-off and high HD states only if similar conditions are created.

This paper investigates the impact of stock market development, money supply and inflation on economic growth in India during the post-globalisation era of the 1990s, especially during the period from 1994 to 2012. Using autoregressive distributive lag (ARDL) bounds testing approach, the study finds stock market development, money supply, inflation and economic growth are cointegrated, suggesting the presence of a long-run equilibrium relationship between them. The vector autoregressive error correction model (VECM) further confirms the existence of both bidirectional and unidirectional causality between economic growth, money supply, inflation and stock market development in India. The policy implication of this study is that inflation and money supply can be considered a policy variable to predict both economic growth and stock market development in the Indian economy during the post globalisation era.

The paper examines the response of poverty reduction based on financial development and economic growth in India. The ARDL and ECM based model techniques analyze the long-run and short-run relationship among the variables in the model. The long-run estimates depict that financial development and economic growth have not significantly impacted poverty reduction and, on the other hand, resulted in injecting inequality and becoming attended to wealthier sections of the society. The short-run estimates show that financial development and economic growth have successfully tried to reduce poverty in India. The results flash a long-run nature of poverty in India and need to designs and formulations of policies that should be instrumental in reducing poverty. Impulse Response Functions' application indicates that poverty reduction will act as a catalyst for further poverty reduction in India.JEL Classification: I32, B26, O40, R15How to Cite:Alam, M. Q., & Alam, M. S. (2021). Financial Development, Economic Growth, and Poverty Reduction in India. Etikonomi: Jurnal Ekonomi, 20(1), 13 – 22. https://doi.org/10.15408/etk.v20i1.18417.