IMPACT OF FOREIGN DIRECT INVESTMENT ON ECONOMIC GROWTH OF INDIA: AN ANALYSIS OF SECTORAL AND REGIONAL ECONOMIC PROGRESS

Abstract

The study aims to evaluate the impact of Foreign Direct Investment (FDI) on economic growth in India considering both sectoral and state level output using data from 2006 to 2021. Level of Gross Domestic Product (GDP), Sectoral Gross Value Added (SGVA) and Net State Domestic Product (NSDP) have been used as indicators of economic progress. While evaluating the impact of FDI on state level output, several control variables like availability of power, road and rail transportation, banking infrastructure, government expenditure and human capital have been used. Johansen cointegration result indicates no long run relation between FDI and GDP. However, FDI found to have a statistically significant positive impact on output of selected sectors and states.