Econometric Analysis of Effects of Savings and Investments on Economic Growth in India

Abstract

This paper examined the dynamic causal relationship between savings, investments and economic growth in India from 1990 to 2021, taking into account the influence of post-economic reforms on economic growth by employing time series econometric models. The results indicated that all the variables were stationary at their first difference. The VECM result confirmed that there was a long-run relationship among the variables. The decomposition results suggested that the Indian economic growth variation was explained mainly by domestic savings. The findings of the study would be useful for policymakers and governments to take appropriate development strategies and effective policies.