Impact of foreign direct investment on Indian economy: A study

Abstract

Foreign Direct Investment plays a very important role in the development of any economy, because it not only brings capital but will also give other benefits in the form of technology, managerial skill and human capital for the economic growth. Developing countries make their policy liberal to attract FDIs. India is one of the developing country which needs capital for its further growth and development, which is filled by FDI. It is evidently shown a positive trend of FDI on average of 55296.92 Rs. Crores and annual growth rate is 35.05 %. It is clearly established that there is strong correlation between the economic growth of a country and FDI inflows, in terms of a change in major macro economic variables. In the light of the above assumption the present research paper made an attempt to study and analyze the extent of impact of FDI on selective macro economic variables. The study has been used appropriate statistical techniques such as descriptive, correlation, regression analysis, ADF and Granger Causality Test by using E-Views Software. Variables used in the study are GDPFC, GRGDP, Foreign Exchange Reserves, Export, Import, Exchange Rate and Inflation and FDI.