International Journal For Multidisciplinary Research

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Impact of External Debt on Economic Growth in India: An Econometric Analysis

Author(s) Amanda Veronica Ponceno, Dr. S. Indumati
Country India
Abstract The present study investigates the impact of external debt on India’s economic growth from 1990-1991 to 2022-2023, where GDP per-capita is a proxy for economic growth. The study also includes some control variables such as gross capital formation, savings and foreign direct investments to assess their impact on economic growth in India. The Johansen Co-integration results revealed a long-run relationship between the variables and the results of the Vector error correction showed that the dependent variable returns to the path of equilibrium at the speed of 18.61% in the long-run. The Granger causality results revealed that there was only a unidirectional relationship between economic growth and total external debt. It is recommended that the Government of India should utilize its external funds in profitable channels which would in turn generate revenue that can be employed to service their debt obligations.
Keywords Total External Debt, Economic Growth, Johansen Co-integration Test, VCEM Model.
Published In Volume 5, Issue 6, November-December 2023
Published On 2023-11-12
Cite This Impact of External Debt on Economic Growth in India: An Econometric Analysis - Amanda Veronica Ponceno, Dr. S. Indumati - IJFMR Volume 5, Issue 6, November-December 2023. DOI 10.36948/ijfmr.2023.v05i06.8720
DOI https://doi.org/10.36948/ijfmr.2023.v05i06.8720
Short DOI https://doi.org/gs4xrh

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