A Study on Analysis of the Relationship Between GDP Growth and Inflation in India
Dr. Kiran Kumar M, Anushka Komirelli, Meghana S, Prafull L N
1 Assistant Professor – Finance, 2 MBA Student of Finance, 3 MBA Student of Finance, 4 MBA Student of Finance Faculty of Management Studies, CMS Business School, Jain (Deemed-to-be University), Bengaluru, Karnataka – 560009
1 kiranm287@gmail.com, 2 anushka_komirelli23@cms.ac.in, 3 meghana_shankar23@cms.ac.in, 4 prafull_ln23@cms.ac.in
ABSTRACT
It examines the inter-relation between the GDP growth rate of India and the inflation rate of India from 2013 to 2023, which has been a serious gap in the research work on how such parameters interact with the present-day economic policies and reforms. It focuses on themes of analysis of trends, study of correlations, and evaluation of implications for economic policy. This paper is based on a quantitative approach with critical data obtained regarding the macro variables of the World Bank and Reserve Bank of India. The statistical procedures used are descriptive analysis, covariance test, correlation tests, and multiple regression analysis for extracting insights from data.
The results show fluctuation growth in GDP; it bottomed out in 2020 during the pandemic caused by COVID-19 at -7.96%. One can draw that inflation rates are volatile as it peaks in the year 2013 at 9.13% and stabilizes thereafter. On the current regression analysis, the coefficient is weak and statistically insignificant while the R-squared stands at 0.041. This means that inflation changes account for less than 5% of GDP growth variability, which marks the complexity in the relationship between these two factors during this period.
These findings would be of extreme consequence to policymakers; inflation must be checked, but this alone will not make the decision the economy grows. A total approach from the perspective of policymakers is warranted wherein they take into account other factors which determine the economy's performance besides just controlling inflation. More important is the development of more robust data, more variables related to the economy, and sophisticated analytical tools incorporated in further research to enhance the understanding of changing dynamics of the Indian economic scenario. Conclusion This study explains the intricate relationship between GDP growth and inflation in India, where it brings out the necessity for matrix economic policies to ensure sustainable growth and stability against persistent fluctuations in the economy.
Keywords: GDP growth, Inflation, Economic stability, India, Macroeconomic policy
