A Study on the Impact of FII, FDI and GDson GDP of India

Gross Domestic Product (GDP) is the broadest quantitative measure of a nation’s total economic activity. GDP represents the monetary value of all goods and services produced within a nation’s geographic borders over a specified period of time. A country’s financial health and growth in the global economy is measured with the help of this macroeconomic factor. In the recent times, India’s GDP has developed immensely emphasizing the country as one of the most promising emerging economy. India remains the fastest growing country across the world with an estimated GDP growth of 7.5% compared to global GDP of 2.5% in the current year. The economic theories on growth, state’s investment and savings are the most significant factors contributing to a higher growth. This investment can be broadly classified into domestic savings & foreign capital aiding the growth. In this context the study was focused to understand the relationship among various investments and savings augmenting the GDP growth. The data for the analysis was secondary, collected from the RBI Bulletin. Econometric tools such as ADF test, vector auto regression & Granger causality test were used for the analysis. FII was found stationary at level and was dropped from the analysis; the remaining factors were used to fit a ARDLModel. The Granger causality test as well proved a unidirectional relationship from FDI and GDS to GDP.