December 29, 2019 | Working Paper
  • Headline: India's Economic Growth Path
  • Intro Text: In “Revising India’s Economic Growth Transitions,” Deepankar Basu examines two questions relating to India's economic growth trajectory: structural breaks in growth and the impact of equipment investment on aggregate economic growth. He first shows that substantial accelerations in India’s growth path have occurred only at two points since the 1960s, in 1978-79 and 2004-05. Basu also finds that private investment in equipment and machinery exerts a significant positive impact on India’s GDP growth. These findings shed new light on how India transitioned from a slow to a fast overall growth trajectory starting in the 1990s.
  • Type of publication: Working Paper
  • Research or In The Media: Research
  • Research Area: Asian Political Economy
  • Publication Date: 2019-12-29
  • View pdf
  • Authors:
    • Add Authors: Deepankar Basu
  • Show in Front Page Modules: Yes
  • JEL Codes: O53
Revisiting India's Growth Transitions

Abstract

This paper reconsiders two questions relating to India's economic growth: structural breaks in growth and the impact of equipment investment on aggregate economic growth. First, statistical tests of structural change show that economic growth in post-independence India has witnessed four structural breaks: in 1964-65, in 1978-79, in 1990-91, and in 2004-05. However, substantial growth accelerations, i.e. an increase of more than 1.0% per annum in the growth rate of per capita real GDP, occurred only at two points: 1978-79 and 2004-05. Second, to analyze the impact of equipment investment on growth, I use an ARDL bounds testing methodology. I find a positive and statistically significant long run positive impact of private investment in equipment and machinery on the growth rate of real GDP.

umass logo

This is an official web page
of the University of Massachusetts.

Political Economy Research Institute

Gordon Hall, 418 N. Pleasant St., Suite A

Amherst, MA 01002
Tel: 413-545-6355 Fax: 413-577-0261
Contact: