Relevance of saving and investment for growth in India: A granger causality approach

The puzzle to know the growth story of a nation has always been interesting. During this course we try to identify the factors which lead to more growth of few and less of others. Savings and investments are supposed to play a major role in this story. In the present paper we have tried to analyze the relevance of saving and investment for growth in India by understanding their interrelations. For this matter we have applied the granger causality test on the annual data from 1951–2011.The results indicate that saving and investment granger cause growth but the other way round could not be accepted. Feedback granger causality was found between saving and investment. Our analysis proposes to focus on policies promoting savings as well as investment for growth to accelerate.