An Empirical Analysis of the Effectiveness of Government Fiscal Policies in Promoting Sustainable Economic Growth in India

Abstract

This research scrutinizes the effectiveness of government fiscal policies in cultivating sustainable economic growth in India. Drawing on an extensive dataset spanning over a decade, the study meticulously examines crucial fiscal variables, encompassing Gross Domestic Product (GDP) growth, inflation rates (Consumer Price Index and GDP deflator), and real interest rates. Through rigorous statistical analysis, elucidate the intricate relationships between these variables, casting light on the nuanced impact of fiscal measures on the Indian economy. Findings underscore the pivotal role of fiscal policies in shaping economic trajectories. Notably, a substantial negative correlation between real interest rates and economic growth underscores the critical importance of interest rate management. Furthermore, positive correlations between GDP growth and inflation rates signify the delicate balance required for optimal economic stability. This research delves deep into the contextual nuances, considering historical events and policy changes that have influenced these relationships. This research not only contributes empirical insights to the field of finance but also furnishes actionable recommendations for policymakers. By comprehending the intricate interplay of fiscal variables, policymakers can craft more targeted and effective strategies, fostering sustainable economic growth and ensuring the long-term prosperity of the Indian economy.