Financial crisis: The incrediable hulk in Indian economic growth and external sector

Soumitra Kumar Bera

MPRA Paper from University Library of Munich, Germany

Abstract: This paper empirically examines the impact of current world-wide recession on India’s growth. The data for this study were compiled from RBI and Central Statistical Organisation (CSO). The paper has applied regression technique with GDP as dependent variable, while exports, imports, FDI and FII were taken as independent variables. Prior to regression analysis, all the variables are tested for stationarity, applying Augmented Dickey-Fuller (ADF) test. The data sets were also tested for seasonality by applying auxiliary regression. Because of the problem of multicolinearity among the independent variables, three models, dropping one of the highly collinear variables, were estimated. The results suggest that financial crisis has adversely impacted India’s GDP although imports, exports and FDI were found to have exercised stimulating influence through technological spillovers and other externalities. The paper suggests that recovery of global economy is extremely important for Indian economic growth although the effects of global slow down could be minimized through the use of stimulant fiscal and monetary measures.

Keywords: The impact on the world economy; Impact on Indian Economy; Impact on External Sector; Data Sources and Methodology; Regression Analysis: Discussion and Interpretation; Seasonality test; Regression Results and discussion; Conclusions (search for similar items in EconPapers)
JEL-codes: F37 F43 O16 O47 P45 (search for similar items in EconPapers)
Date: 2010-04-22
New Economics Papers: this item is included in nep-fdg
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