Remittance Inflows And Economic Growth: Exploring The Short-Run And Long-Run Dynamics In India

Abstract

The study adopted the ARDL test technique and the ECM based technique to establish the long-run and short-run relationship between remittance inflows and economic growth in India during the period 1981 to 2017. The remittance inflows serve as a significant source of foreign capital. As an important part of foreign exchange, it acts as a catalyst on the BOP front in the country. The outcome does not reveal the presence of a positive and significant relationship between remittance inflows and economic growth in India during the aforesaid period. The estimated coefficients of domestic investment show a positive impact on economic growth in the short run. The estimated outcomes depict a positive and significant impact of FDI inflows on economic growth in the long run and with lag by one period in the short run. The negative impact of inward remittance and the domestic level of investment are due to the inappropriate policy measures aimed to boost the real sectors of the economy. The outcomes call for autonomous investment in the form of capital expenditure that the area needed to boost the economic growth and development and not merely having dependency on inward remittance and inward FDI inflows in the country.