This paper investigates the dynamic relationships between physical infrastructure, financial development and economic growth in the case of India, using the autoregressive distributed lag and the Toda–Yamamoto causality approach for the period 1980 to 2016. A physical infrastructure index and a financial development index are constructed using the principal component analysis. The empirical results suggest that physical infrastructure has a positive effect on economic growth both in the long run and short run, whereas financial development, although significant, has a weak impact on economic growth. The causality test supports a bidirectional causal relationship between infrastructure development and economic growth, while it finds unidirectional causation running from economic growth to financial development. As India is aiming for higher growth for a sustained period, our results suggest that there is a need for government intervention in expanding the physical infrastructure and this, in turn, could lead to economic growth as well as financial sector development.

中文翻译：

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分析印度基础设施，金融发展与经济增长之间的动态关系

本文使用自回归分布滞后和Toda-Yamamoto因果关系方法研究了1980年至2016年印度有形基础设施，金融发展与经济增长之间的动态关系。有形基础设施指数和金融发展指数分别为使用主成分分析构建。实证结果表明，有形基础设施无论从长期还是短期都对经济增长产生积极的影响，而金融发展尽管意义重大，但对经济增长的影响却微弱。因果关系检验支持基础设施发展与经济增长之间的双向因果关系，同时它发现了从经济增长到金融发展的单向因果关系。