Inadequacy of Economic Growth for Economic Development; an Empirical Study of Indian Economy

Abstract

GDP or per capita GDP growth is often seen as a measure of well-being and economic success. However, the multifaceted nature of economic development is not taken into account by these indicators, which focuses more on income equality and proper utilization of power. The current measure of economic growth as a GDP has several limitations when it is used to analyze economic development. To study the multidimensional form of development, various indicators such as Human Development Index, Economic Freedom Index, Happiness Index, etc. should be considered more appropriate indications.

This paper covers and examines the relationship between Gross Domestic Product Per Capita PPP $(GDP Per Capita), Human Development Index (HDI) and the Economic Freedom Index (EFI), in context of India through statistical analysis of published data from 1996 to 2018. Studies had already been done on Happiness Index; therefore, it is completely excluded. Time series techniques examine the direction of the relationship and co-integration among the variables. Granger causality test results proved that unidirectional causality is running between HDI and GDP Per capita as well as between HDI and EFI whereas causality is found absent between GDP Per Capita and EFI. This study helps in identifying possible impediments that limit proper policy implementation on one hand and lack of strategic planning and management on the other.