ISSN: 2056-3736 (Online Version) | 2056-3728 (Print Version)

Infrastructure Investment and the Indian Economy

Atrayee Ghosh Roy

Correspondence: Atrayee Ghosh Roy,

Minnesota State University, USA

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The purpose of this paper is to investigate the growth effect of physical infrastructure investment in India. Using time-series data for the 1980-2014 period, this paper attempts to empirically test whether India’s inefficient executions of infrastructure investment projects can impede its impressive economic growth potential. A simultaneous equation model is developed to address the problem of a bi-directional relationship between physical infrastructure investment and economic growth. The results find that the contribution of physical infrastructure investment to national economic growth is negative and statistically significant. Furthermore, the results also indicate that physical infrastructure investment in India is not keeping pace with its rapid economic growth.


  Infrastructure investment, economic growth, simultaneity, stationary


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