Impact of Petroleum Exports on Economic Growth in India: An ARDL Approach

Economics

The main aim of this study is to provide systematic analysis of impact of petroleum exports on economic growth in India using Auto Regressive Distribute Lag (ARDL) model. The Augmented Dickey-Fuller test results revealed that the time series data for both the dependent and independent variables display stationary characteristics at mixed levels. Bounds test concluded that a long-term relationship exists between the independent variables and the dependent variable. The ARDL long-run estimation results indicated a positive relationship between petroleum exports and economic growth in India. The coefficients associated with petroleum exports were found to be statistically significant at the one per cent level. The coefficient of the error correction term in short-run, as indicated, holds substantial significance and exhibits a negative sign. This finding confirms the existence of a cointegration relationship between the variables. Specifically, approximately 1.3 per cent of disequilibrium from the shock experienced in the previous year converges back to the long-run equilibrium in the current year, with a statistical significance of one per cent. Consequently, the outcomes suggest that petroleum exports exert both short-run and long-run impacts on the economic growth of India. As a result, the study advises the government (policy makers) to focus on reducing the total costs, improving more refinery companies, and enhancing the competitiveness of India's petroleum exports.

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