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Research Paper | Economics | India | Volume 12 Issue 6, June 2023 | Popularity: 6.7 / 10

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Trends in CPI and GDP of India

Riya Chaudhary, Dr. Bharti Kapur

Abstract: The present study attempts to examine the trends of Consumer Price Index and Gross Domestic Product of India over the years, with special emphasis on the impact on each other. This study uses regression model to estimate the trend of CPI over the years and GDP over the years with observations from 1980-2021. Data of determinants and other related information has been collected from a variety of secondary sources like World Bank and IMF. Paired t test and granger causality test has been developed to estimate the results. Before reporting the results obtained by paired t test and granger causality test, this study presents various hypothesis testing results to know the significance of unobservable significance in data set. Paired t test is carried out to compare the means of two related or dependent groups. It is specifically designed to analyze the differences between paired observations. Granger causality test is carried out to check if the variable CPI is having any cause on variable GDP. Final results have been drawn from both tests. Overall trends of CPI and GDP show that the CPI and GDP of India have increased over the years. The econometric tool used is paired t test, which shows that the mean difference between two variables which is relatively higher from each other, stating the increment in the level of CPI. Fluctuations in the level of GDP were observed during 2020 due to corona virus situation. Granger causality test was performed to observe the impact of CPI on GDP which was clarified after the test by stating the result that GDP does not cause impact on GDP and GDP does not granger cause on CPI. There have been many policy suggestions provided for the government to review the ideas for the better growth of the economy.

Keywords: CPI, GDP, Fluctuations, Corona virus, Taxation, Fiscal policy

Edition: Volume 12 Issue 6, June 2023

Pages: 673 - 678

DOI: https://www.doi.org/10.21275/SR23528002525

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