Influence of Direct Productive Expenditure and Inflation on Economic Growth in India

Abstract

The present study explored the relationship between gross capital formation and economic growth in India from 1991 to 2020. The results revealed a positive relationship between gross capital formation and economic growth in India. The study also found the positive impact of gross domestic savings and government expenditure on economic growth. The study further revealed a negative relationship between the consumer price index and economic growth. Based on empirical results, the study suggested that the government should raise the level of capital formation to achieve tremendous economic growth. Further, there is a need to create an environment conducive to saving and investments within the economy, which will eventually support long-term economic growth. Keywords: Autoregressive distributed lag, capital formation, GDP, gross capital formation. JEL Codes: E00, E20, 040.