A Study on Impact of FDI on Indian Economy– An Empirical Analysis
Authors:-Assistant Professor Dr. Pooja Kumari, Associate Professor Dr. R. Vennila
Abstract- A lot of debate is going on about the importance of foreign direct investment (FDI) in the process of growth has been hot in a number of nations, including India. The foundation and prerequisite for economic development and growth is investment. In addition to a country’s foreign exchange reserves, other factors that are essential to its health include exports, government revenue, financial status, the amount of available domestic savings, and the volume and caliber of foreign investment. The aim of this study is to analyze the impact of FDI on Indian Economy. To meet the objective of the study time series data is used 2005 to 2023. Variables used in the study are Foreign Direct Investment as dependent variable and Gross Domestic Capital Formation (GDCF), export, import, Gross Domestic Product (GDP), Foreign Exchange Reserve (FER) and Wholesale Price Index (WPI)as independent variables. Techniques used in this study are descriptive test, correlation and regression analysis. FDI exhibits a positive correlation with variables such as GDCF (0.44), Export (0.38), Import (0.42), GDP (0.44), and FER (0.44). This implies that a 1% increase in FDI corresponds to a corresponding degree of change in other variables. The correlation between WPI and FDI is negative, or – 0.22, indicating that the two variables go in different directions. The study concluded that FDI statically significantly impact on Indian economy.
