IMPACT OF FISCAL DEFICIT ON INDIAN ECONOMY

B. TEENA LAKSHMI¹*, P. NASURUDEEN², L. UMAMAHESHWARI³, K. AYYOOB^4
1Department of Agricultural and Rural Management, Centre for Agricultural and Rural Development Studies, Tamil Nadu Agricultural University, Coimbatore, 641003, India
²Department of Agricultural Economics and Extension, PAN College of Agriculture, Karaikal, Nedungadu Post, Puducherry, 609603, India
³Department of Agricultural Economics and Extension, PAN College of Agriculture, Karaikal, Nedungadu Post, Puducherry, 609603, India
⁴Kerala Agricultural University, Thrissur, 680656, Kerala, India
* Corresponding Author : baskaranteena9@gmail.com

Received : 02-12-2019     Accepted : 27-12-2019     Published : 30-12-2019
Volume : 11     Issue : 24       Pages : 9320 - 9322
Int J Agr Sci 11.24 (2019):9320-9322

Keywords : Economic growth, Fiscal deficit, Johansen cointegration test, Regression analysis, Vector error correction model
Academic Editor : P. V. Jadhav
Conflict of Interest : None declared
Acknowledgements/Funding : Authors are thankful to Department of Agricultural Economics and Extension, PAN College of Agriculture, Karaikal, Nedungadu Post, Puducherry, 609603, India
Author Contribution : All authors equally contributed

The study on impact of fiscal deficit on economic growth in India with an objective of estimating the relationship between economic growth variables. The period of study is from 1980-81 to 2016-17, the data collected from various secondary sources on gross domestic product, per capita gross national product, fiscal deficit etc. The collected data was analysed using percentage regression analysis, Johansen Cointegration test and Vector Error Correction model. This study has adopted two functions to analyse the impact of fiscal deficit on economic growth. Johansen Cointegration test and Vector Error Correction Model (VECM) were employed to check cointegration relationships among the variables. The results of the error correction model indicated the absence of any short run relationship between the variables for models. This study is support with Keynesian view that there is a positive relationship with fiscal deficit and economic growth.

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