Investigating the Relationship between Transport Infrastructure and Economic Growth: The Case of India

The paper aims to empirically analyze the relationship between Transport Infrastructure and Economic growth for India using yearly data over the time period of 1999 to 2014. We have aimed to assess this eye catching issue after the recent focus of Indian government to focus on Infrastructure and in particular Transport infrastructure as it plays an important role in the economic development of the country. We have taken data indicators like Road length, Rail route, Gross fixed capital formation (GFCF) and GDP (Gross domestic product) for our analysis. The Road and Rail indicators represent the Transport Infrastructure whereas GFCF and GDP represent infrastructure investment and economic growth respectively. The empirical results from our analysis establish there exist only a short term relationship between GDP and Transport infrastructure. Further, Granger Causality test showed that there exists bidirectional causality between GDP and Transport Infrastructure. Therefore, keeping in view of the long term stability, it is suggested that boosting foreign inflows, particular focus on increasing the private participation, along with strengthing Transport infrastructure is quite important if we are to proficiently move on the path of economic development.