An Empirical Study on Impact of Infrastructural Development on Social and Economic Growth in Indian States

Abstract

The study attempts to draw a relationship between infrastructural development and socio-economic growth in India. It further tries to determine the magnitude of the impact of infrastructural investment on social and economic indicators. The study uses panel regression technique to measure the impact of infrastructural investment on social growth indicator, i.e., state-wise Mortality Rate per Thousand Population (MRPTP) and economic growth indicator, i.e., Per-capita Income (PCI) in Indian States. Panel regression technique helps incorporate both the cross-section and time-series aspects of the dataset. In order to analyze the difference in impact of the explanatory variables on the explained variables across states, the study uses Fixed Effect Dummy Variable Model. The conclusions of the study are that infrastructural investment has a desirable impact on social and economic development and that the impact is different for different states in India. We analyze time series data (annual frequency) ranging from 1987 to 2008. The study reveals that the infrastructural investment significantly explains the variation of social and economic indicators.

Keywords: Infrastructural Investment, Multiple Regression, Panel Regression Techniques, Socio-economic Development, Fixed Effect Dummy Variable Model