Modelling The Causality of Public Expenditure, Public Debt and Inflation Rate Change on The Annual GDP Growth Rate of India

Author(s)	Mr. ANURAG VIKRAM SINGH, Dr. SHILPA SREE R, Mr. DINESH KUMAR
Country	India
Abstract	The present research focuses on the causal link between public spending, public debt, inflation rate change, and the country's annual GDP growth rate for the years 2014–2024. Applying Robust Least Squares analysis with M-estimation (Huber Type I), the model accounts for non-linearity, outliers, and heteroskedasticity that are prevalent in macroeconomic time series. The study is based on secondary data gathered from reliable sources such as Macrotrends, World Bank, and the Economic Survey of India. Empirical results indicate a statistically significant and negative influence of all the independent variables on GDP growth, with public expenditure having the strongest influence. The classical regression demonstrates moderate explanatory power (R² = 0.58), whereas strong diagnostics reveal the model to be an excellent fit (Rw² = 0.98, Rn² ≈ 1.00). The findings support the imperative of efficient public resource use and prudent fiscal policy to promote long-term economic growth in countries such as India.
Keywords	GDP growth, public expenditure, public debt, inflation rate, robust least squares, fiscal policy, India
Field	Sociology > Economics
Published In	Volume 7, Issue 4, July-August 2025
Published On	2025-07-06
DOI	https://doi.org/10.36948/ijfmr.2025.v07i04.50292
Short DOI	https://doi.org/g9s9gz

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