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Savings and Economic Growth in India: The Long-Run Nexus


  • Pravakar Sahoo

    (Institute for Social and Economic Change)

  • Geethanjali Nataraj


In this paper, the causal nexus between savings and economic growth in India is investigated within the framework of causality, co-integration and error correction in the presence of a structural break, using annual data from 1950-1951 to 1998-1999. Identifying the structural breaks in both savings and economic growth in different time period, this study finds support for the long-run equilibrium between savings and economic growth. Further, the study reveals that there is a unidirectional causality from economic growth to savings, thereby repudiating the classical view that savings has been the engine of economic growth.

Suggested Citation

  • Pravakar Sahoo & Geethanjali Nataraj, 2000. "Savings and Economic Growth in India: The Long-Run Nexus," Working Papers 77, Institute for Social and Economic Change, Bangalore.
  • Handle: RePEc:sch:wpaper:77

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    Cited by:

    1. Verma, R. & Wilson, E.J., 2005. "A Multivariate Analysis of Savings, Investment, and Growth in India," Economics Working Papers wp05-24, School of Economics, University of Wollongong, NSW, Australia.
    2. Verma, R. & Wilson, E.J., 2005. "Savings, Investment, Foreign Inflows and Economic Growth of the Indian Economy 1950-2001," Economics Working Papers wp05-23, School of Economics, University of Wollongong, NSW, Australia.
    3. Rathinam Francis Xavier & Raja Angara Viswasundara, 2010. "Law and Availability of Credit: Evidence from India," Asian Journal of Law and Economics, De Gruyter, vol. 1(2), pages 1-26, December.

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    Savings; Economic Growth;


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