Impact of Industrial composition on India’s GDP growth rate based on multiple Regression

Abstract

Transformation of agricultural to industrial based after the advent of New Economic Reforms in India has changed the structure of the economy. This shift is somehow not sufficient to hasten the pace of the country. Therefore, in order to examine if Industrial sector contributes to the growth of the country, multiple regression has been employed covering the period 1960-2017, with the explanatory variables as industry, mining and quarrying and manufacturing. The result found that the secondary sector does not significantly contribute to the growth of the country. The study further tried to incorporate the impact of Service sector and agricultural sector to the impact on the country’s GDP. Here, the impact of service sector was found to be significant at 10% level of significance, i.e 1% point increase in service sector leads to 0.0049 % point increase in GDP of the country. The paper concludes that industrials sector should be given priority and environment to grow as it is considered to be the backbone of the economy