Analyzing the impact of positive and negative remittance inflow shocks on economic growth of India

Abstract

Purpose

The purpose of this paper is to empirically analyze the impact of remittance inflows on sustained economic growth in India.

Design/methodology/approach

This study has taken a time series dataset for the period of 1976–2021, and a nonlinear autoregressive distributed lag model technique (NARDL) has been applied to check the impact of remittance inflows along with other control variables, including broad money and service sector performance, on the sustained economic growth of India.

Findings

The results of the study indicated that in both the short and long runs, any positive shock in remittance inflows has a positive impact on the economic growth of India, while negative shocks do not affect economic growth.

Practical implications

The economic policymakers of India can use the findings of the study by implementing remittance-friendly policies. Moreover, NITI Aayog, the body working toward achieving sustainable development goals (SDGs) in India, can also use this study as a reference while making strategies to achieve SDG.

Originality/value

Economic growth has always been an area of interest among economists, researchers and policymakers. However, achieving sustained economic growth requires an analysis of those factors that themselves have sustained performance over a long period of time and have the potential to sustain it over the upcoming years. This study has taken remittance inflows as one such factor and investigated its impact on the sustained economic growth of India. At present, there is an evident gap in the literature that very little attention has been given to sustained Indian economic growth. Moreover, there is no study available in which the nonlinear impact of different variables has been tested on the economic growth of India.

Citation

Khan, I. (2024), "Analyzing the impact of positive and negative remittance inflow shocks on economic growth of India", Journal of Economic Studies, Vol. 51 No. 2, pp. 338-356. https://doi.org/10.1108/JES-02-2023-0089