Impact of Regional Air connectivity on Regional Economic Growth in India

Abstract

In this study, we have used the panel data of 15 federal states to evaluate the empirical linkages between regional economic growth, air transport traffic, and surface transport indicators. There is a dearth of academic articles focusing on inter-dependence between these factors in the context of India. Pedroni panel cointegration, FMOLS, panel VECM causality techniques, and variance decomposition analysis have been used to evaluate dynamics between the three variables. The evaluation of linkages between the regional air connectivity and the regional economic growth holds practical implications since it forms the basis of various policy and regulatory measures instituted in the Indian air transport sector. The bidirectional relationship between air transport and surface transport indicators calls for making multi-modal studies by experts as guiding force behind planning processes instead of relying purely on bureaucratic consultation.