Symmetric and asymmetric impact of infrastructure on economic growth in India

This study investigates both the symmetric and asymmetric relationships between infrastructure development and economic growth in India, using annual data spanning from 1991 to 2022. To measure infrastructure, an index of infrastructure development is created through the principal component method. To assess the potential linear and non-linear impact of infrastructure development on economic growth, both linear and non-linear autoregressive distributed lag (ARDL) models are employed. The ARDL results indicate that infrastructure development promotes economic growth both in the short and long run. The non-linear ARDL model confirms the existence of asymmetric effects, showing that positive shocks to infrastructure promote economic growth, whereas negative shocks impede growth. The negative shock has a stronger adverse impact on growth compared with the positive impact generated by the expansion in infrastructure. The Wald test further supported the presence of an asymmetric relationship between infrastructure development and economic growth in the long run. These findings highlight that infrastructure development is a key policy instrument for promoting sustained economic growth in India and also emphasise the urgent need for maintaining existing infrastructure. The study suggests that India should follow an infrastructure development-led growth strategy to achieve high and sustained economic growth.