Growth and Fluctuation in India’s GDP and Sectoral GDP: 1970-71 to 2019-20

Abstract

This paper investigates empirical issues regarding endogenous estimation of growth and fluctuations in India's GDP and its three important sectors, namely, the agricultural, the manufacturing and the service sectors in the period from 1970-71 to 2019-20. The methodology for evaluating the deterministic growth in a time series is well established. However, those for fluctuations around the growth path are diverse based on seemingly different aspects of fluctuations. Some existing tools and techniques are combined and modified to form a unified methodology to estimate fluctuation around the growth path. To evaluate the fluctuations, we compare the RSS-based method, the Cuddy and Della Valle (1978) method, and the Coppock (1962) method, and find the approximate average length of the full business cycle based on the results obtained from the RSS-based method and the modified Coppock (1962) method of fluctuation. The resulting estimates reveal that both the average exponential annual growth rate and the compound annual growth rate is the lowest for India's GDP coming from the agricultural sector (GDPA) and highest for GDP accruing from the service sector (GDPS). On the other hand, yearto- year fluctuation is lowest for GDPS and highest for GDPA, although overall fluctuation is the lowest for GDPA and the highest for GDPS. The approximate length of the full business cycle is the least for GDPA and the most for GDPS.