The Relationship between Railway Route and Industrial Output of Different Indian States and Union Territories

Abstract

Indian Railway stands out to be the life line of the transport sector of the country. On one hand, a huge number of Indian people depend on the railways for travelling and on the other hand, Indian Railways carries a large amount of goods within the territory for different purposes. The railways are the most preferred mode of transportation for the suburban areas where a large number of passengers need to be moved to and from the metropolitan cities within certain fixed time. This paper aims at studying the relationship between the railway route of different Indian states and union territories and the amount of industrial output by them. The study uses conventional techniques on panel data econometrics, taking data on Gross Value Added of industrial sector, railway route, other state specific control variables like industrial employment, capital formation, amount of industrial credit and using a dummy for a coordination between state Governments and central Government for different states and union territories. The results show that the railway route does not contribute to the Gross Value Added of industrial sector but it has indirect interaction effects with the other control variables.