Horticulture and economic growth in India: An econometric analysis

Abstract

India’s horticulture production has shown manifold increase in the past two decades and the country is ranking second in the world only next to China. Keeping in mind, the increasing trend in horticulture production and individual product, the purpose of the current paper was to study the short run and long run relation between economic growth and horticulture production as a whole. The study used secondary data on horticulture production and Gross Domestic Product (GDP) from 2001 to 2018. The econometric tools used were Granger Causality Test, Johansen Cointegration test, VECM model and OLS. Johansen Cointegration Test showed that there is long run relation between the variables; The Vector Error Correction model and its probability output showed that there is no significant short run relation between variables except one, that is when horticulture production is considered as independent variable and GDP as dependent variable. Granger Casualty Test showed absence of cause and effect relation (both way) between the three variables. Out of all variables, OLS showed a significant relation only between GDP and horticulture production.The study revealed that horticulture production shares a linear relationship with GDP both as dependent and as independent variable, but the association does not satisfy Granger Causality Test, indicating that there was no cause and effect relation between the variables. Given that agriculture is the backbone of Indian economy, the absence of short run relation between horticulture and food grain production and food grain with GDP is a matter of concern.