Measurement of growth cycle and cyclical characteristics in India

After reforms Indian economy has become market oriented due to this change the cyclical fluctuations are more driven by endogenous factors rather than exogenous factors. Therefore, for both policy makers and economic agents analysis of business cycle plays a very crucial role for predicting a cyclical turning points and taking measures well in time to deal with the situation before hand. This paper attempted to Identify i) the Growth cycles in Indian economy, ii) Cyclical characteristics of growth cycles in the amplitude and duration, and iii)Volatility and persistence in growth cycles in Indian economy. Bry-Boschan procedure has been used to identify the cycles. To find out the average amplitude and duration and diversion in amplitude and duration of growth cycles the method provided by Harding and Pagan has been used. Volatility has been calculated with the help of standard deviation and for measuring persistency in cyclical fluctuations method of autocorrelation correlation function has been used in the study. The study has found that Indian economy has experienced four growth cycles during 1996–2014. The average duration of business cycles was 15.75 quarters and the average amplitude of cycles was Rs. 501.5 billion. The average duration and amplitude of expansionary phases is more than average duration of the Contractionary phases. Cyclical fluctuations in the output quite volatile and significantly persistent.