Economic infrastructure and its impact on economic growth: a case study of 7 sister states

PurposeThis study aims to analyse the impact of economic infrastructure on economic growth in seven sister states in North Eastern India, covering the period 2005-2019.Design/methodology/approachThe authors analysed the data using fixed, random and feasible generalised least squares (FGLS) methods to assess the impact of economic infrastructure, which includes roads, per capita availability of power, electricity transmission losses, commercial banking and gross irrigation, on economic growth.FindingsBased on the results derived from FGLS estimates, the increase in road length, per capita availability of power, commercial banks and gross irrigation affected economic growth positively. In addition, economic growth decreased with the rise in electricity transmission losses, population and infant mortality rate.Research limitations/implicationsThe future scope of this study can be extended by the inclusion of social infrastructure, which includes the education and health sectors in these states. In addition, the causality between economic infrastructure and economic growth can be assessed in the long run. Finally, the channels through which a relationship exists can be taken into account. This study underlines the need for substantial investment in infrastructure such as roads, power, irrigation, banking and transport in North Eastern India to drive economic growth. It highlights the importance of targeted policies to address infrastructure gaps and enhance regional connectivity with Southeast Asia. Emphasising cross-border collaboration and leveraging local resources can stimulate economic development and innovation. These efforts are crucial for overcoming regional disparities and integrating the North East into broader economic frameworks.Social implicationsThis study highlights significant socioeconomic benefits by showing how improved infrastructure, such as roads, power availability, irrigation and banking can drive economic growth in North Eastern India. It suggests that better infrastructure leads to increased productivity, job creation and improved living standards. In addition, this study emphasises that reducing infrastructure gaps can help reduce regional disparities, integrate the region into larger economic networks and foster inclusive development. These benefits have far-reaching impacts, contributing to overall socioeconomic advancement in the area.Originality/valueThis study offers a unique contribution by empirically analysing the role of infrastructure in promoting economic growth at the sub-national level, i.e. North East India. Using advanced econometric techniques of fixed/random effects and FGLS panel models, it mitigates issues of measurement errors and omitted variables to some extent. In addition, this research introduces previously unexplored variables, including roads, power, electricity transmission losses, irrigation and banking, providing new insights into the infrastructure landscape. These findings offer crucial guidance for policymakers to improve and invest in infrastructure, fostering sustainable economic development.