From Humble Beginnings to a Global Economic Powerhouse: A Comprehensive Study of India’s Economic Development Through the Lens of Selected Macroeconomic Indicators (1990–2020)

Abstract

Amidst the tumultuous COVID-19 pandemic and the Russia–Ukraine conflict, India has defied the odds and exhibited remarkable consistency in its macroeconomic performance, surpassing other top 10 global economies. This laudable progress was made even in the aftermath of significant prior disruptions. Therefore, the objective of this research paper is to meticulously scrutinize the macroeconomic determinants that impacted India’s economic growth from 1990 to 2020. The data utilized was sourced from the Reserve Bank of India, and a time series econometric technique was employed to identify stationary and its co-integration using an auto-regressive distributed lag (ARDL) model. This study exhaustively investigates the impact of five macroeconomic indicators, exports, imports, gross capital formation, gross savings, and gross inflow, which propel economic growth. Our findings unequivocally demonstrate that exports, gross capital formation, gross savings, and gross inflows have an indisputably positive and significant effect on India’s economic growth in the short and long run. However, imports negatively impact both the short and long runs. Other macroeconomic variables could not be comprehensively covered due to the absence of relevant data. Nevertheless, this study confers novel insights to policymakers and researchers alike by examining both the short-run and long-run dynamics and employing the Wald test to provide a profound understanding of the macroeconomic determinants indispensable for realizing sustainable economic growth. To the best of the author’s knowledge, this study constitutes a pioneering and original endeavor that undertakes a comprehensive and nuanced examination of economic growth by analyzing multiple macroeconomic indicators simultaneously, thereby providing a holistic and multifaceted understanding of the complex phenomenon of economic growth.