ISSN: 2320-5407 Int. J. Adv. Res.

11(03), 1068-1072

Journal Homepage: - www.journalijar.com

Article DOI: 10.21474/IJAR01/16535

DOI URL: http://dx.doi.org/10.21474/IJAR01/16535

RESEARCH ARTICLE
A REVIEW OF CORRELATION AMONG THE ECONOMIC GROWTH, ECONOMIC UNCERTAINTY
AND SUSTAINABLE DEVELOPMENT IN INDIA

Pawan Kumar Gupta

Assistant Professor, Department of Economics, BSNV PG College, Lucknow.
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Manuscript Info Abstract
……………………. ………………………………………………………………
Manuscript History
Received: 28 January 2023
Final Accepted: 28 February 2023
Published: March 2023
Key words:-
Economic Uncertainty, Sustainable
Development, GDP, Economic Growth
Sustainability of the natural resources is based on human efforts and the
economic development is the base of the sustainable development of
any country. But an economy's development would increase when its
economic uncertainty is at a low level. There are two objectives of the
present research paper; the first is to find the correlation among
sustainable development, economic growth and economic uncertainty
in India and the second is to access the impact of economic growth and
economic uncertainty on the sustainable development of India. The
present research is taking the period of 2000-2022 to access the
correlation and impact of economic growth and economic uncertainty
on sustainable development. The explorative, descriptive and
correlation-regression methods are used to analyse the all shreds of
evidence. The research statements are rejected with strong statistical
evidences and both the objectives of the present research paper are
achieved. As the economic uncertainty is reduced due to strong
economic policies, the economic development takes place and makes
the easy sustainable development path in India.

Copy Right, IJAR, 2023,. All rights reserved.

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Introduction:-
According to the sustainable development committee of the United Kingdom, "Sustainable development is the
development that meets the needs of the present, without compromising the ability of future generations to meet
their own needs.”

Sustainable development is a buzzword we hear from time to time to outline our ideal vision of a future free from all
the problems faced by the inhabitants of the earth. Scarcity of natural resources, gender inequality, and unequal
distribution of wealth is just a few, but they clearly show the problems we are trying to eliminate. However, because
of the ubiquitous nature of the term sustainable development and the seriousness of the situation being resolved,
many regard it as an abstract, unattainable concept that typically conjures up shocking images of highly polluted
oceans. Nonetheless, a deeper understanding of this area and its challenges in our current environment is essential
and can help lead a more conscious and altruistic life.

An increase in economic activity will inevitably produce environmental degradation, which in turn can lead to
potential economic and ecological collapse. This conflict, which inevitably affects the existing social and economic
organization, reflects a lack of strong empirical evidence on the impact of rising income levels on environmental
quality. At this point, human needs demanded a new concept capable of linking economic development and

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Corresponding Author:- Pawan Kumar Gupta
Address:- Assistant Professor, Department of Economics, BSNV PG College, Lucknow.
ISSN: 2320-5407 Int. J. Adv. Res. 11(03), 1068-1072

environmental issues; therefore, the concept of sustainable development largely reflects the coexistence of
environmental quality, economic development and social well-being.

Review Literature:-
Undoubtedly, energy is indispensable for achieving economic development (Xu, Si, et al., 2022). Handley and
Limau (2015) argue that the effect of the EPU on economic growth is more influential than that of monetary or
fiscal policy. Emerging industrialized countries face the fundamental reality of an increasingly uncertain and volatile
economic policy environment (Gu, Ke, et al., 2021). Expected investment decisions and economic growth in
developing countries are largely affected by the uncertainty of consumption/investment plans (Bloom, 2009; Pastor
and Veronesi, 2012). Ahsan, T., et al., (2021) in their study found that EPU negatively affects SG, while
concentrated ownership, board independence and board gender diversity (BGD) contribute positively to the SG of
Chinese companies. Their findings also suggest that concentrated ownership and BGD mitigate the negative effect
of EPU on SG of Chinese firms. Ahsan, T., et. al., (2022) in their research stated that a defensive trading strategy
positively mitigates the negative impact of political uncertainty, while an analytical trading strategy mitigates the
negative impact of political uncertainty on sustainable financial growth. The results of the study provide a guide for
companies to design strategies to effectively deal with political uncertainties. Li, X, Hu, Z, & Zhang, Q (2021) in
their research found that environmental regulation is positively correlated with green innovation, while economic
policy uncertainty hurts green innovation, leading to environmental. The relationship between the remaining two
factors is regulated. Furthermore, considerable regional heterogeneity exists in these causal effects. Uncertainty
actively moderates the impact of environmental regulation on green innovation across sectors. However, it inhibits
green innovation to varying degrees, particularly in the eastern and central regions. Based on empirical results, they
concluded that strict and appropriate environmental regulations are necessary and effective to encourage green
technology innovation in China, especially in regions with uncertain economic policies.

Objective:-
The objectives of the present research paper are:
1. To find the correlation between sustainable development, economic growth and economic uncertainty in India.
2. To access the impact of economic growth and economic uncertainty on the sustainable development of India.

Methodology:-
The present research is taking the period of 2000-2022 to access the correlation and impact of economic growth and
economic uncertainty on sustainable development. The explorative, descriptive and correlation-regression methods
are used to analyse the evidence.

The SDR score is used as an indicator of sustainable development in India. The GDP is taken as the indicator of
Economic development indicator. The economic uncertainty in India is taken from the world uncertainty index.

The figures are presented with the deflator value of all variables for representing interaction among the variables.

The average of 12 months' economic uncertainty index value is taken as annual uncertainty for all years from 2000
to 2022.

The regression model is

SDR score = α + β1 GDP + β2 Economic Uncertainty + µ
Where;
α is the intercept value of autonomous sustainable development in India
β is the multiplier for independent variables; GDP and economic uncertainty in India
µ is the white noise in statistical analysis

The Research Statements are:

1. The economic growth of India and economic uncertainty are not significantly correlated with SDR.
2. There is no significant impact of economic growth and economic uncertainty on SDR in India during the study
period.

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Analysis and Result:-

The SDR score is a way to show the level of sustainable development in India. GDP is in billion USD and
uncertainty is in index value, to represent the correlation on the figure chart, the deflators of these variables are used.
The deflator presents the growth of the variable with time in stationary terms.

Figure 1:- The path of economic uncertainty and GDP in India.

300

250 d_Uncertainty

200 d_GDP
150

100
50
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Source: World Bank Data and Economic Uncertainty Index

Figure 2:- The path of GDP and level of sustainable development in India.
140
120
100
80
60 d_GDP
40 d_SDR
20
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022

Source: World Bank Data and World SDR Report.

Figure 3:- Interaction among the level of development, GDP and economic uncertainty.
300 d_Uncertainty
250
d_GDP
200
150 d_SDR
100
50
0
2001

2015
2000

2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014

2016
2017
2018
2019
2020
2021
2022

Source: World Bank Data, World SDR Report and Economic Uncertainty Index.

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Relationship among the Sustainable Development, Economic Growth and Economic Uncertainty in India
Table 1:- Level of connection by the correlation coefficient.

. correlate annualuncertainty gdp sdrscore

(obs=22)

annual~y gdp sdrscore

annualunce~y 1.0000
gdp -0.0737 1.0000
sdrscore -0.1564 0.9821 1.0000
Source: projection by researcher

In the above figure and table, it is tried to present that the rate of growth of GDP and SDR of India is rising but the
rate of growth of GDP is higher than the rate of growth of SDR. The path of SDR is showing that it rose at a higher
speed after 2015.

The path of GDP is also indicating that it rose at a higher rate of growth after 2014 which shows that it is indicating
the positive performance of the economy till 2019 but from 2019 to 2021 it fluctuated with high rates due to the
automobile sector's low performance which affects the economy very negatively.

With all these points, economic uncertainty reduced after 2014 in India due to the high majority and stable central
government and its strong economic policies to increase stability in the economy by reducing instability in the
economy of India. Before 2014, the picture of economic uncertainty is not consistent in its path due to the non-
majority central government in India and its polite policies.

If it is talked about the correlation between GDP and SDR is highly positive during 2000-2023 and the correlation
with economic uncertainty is also negative during the same period. It shows that if the economic uncertainty is
reduced the SDR will always rise.

Table 2:- Regression of the level of sustainable development throws GDP and economic uncertainty.

. newey d_sdr d_uncertainty d_gdp, lag(3)

Regression with Newey-West standard errors Number of obs = 22

maximum lag: 3 F( 2, 19) = 168.88
Prob > F = 0.0000

Newey-West
d_sdr Coef. Std. Err. t P>|t| [95% Conf. Interval]

d_uncertainty -.0088369 .0021745 -4.06 0.001 -.0133883 -.0042855

d_gdp .1725447 .0100209 17.22 0.000 .1515707 .1935188
_cons 84.97265 .8727784 97.36 0.000 83.1459 86.79939
Source: projection by researcher

Now the regression equation is

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SDR score = 84.972 + 0.173 GDP – 0.009 Economic Uncertainty

In the table-2, the rate of growth of SDR is regressed on the rate of growth of economic uncertainty and also the
GDP of India. The model is statistically significant at a 1 per cent level of significance. The independent variables;
GDP and economic uncertainty are also statistically significant at 1 per cent of the level of significance. A maximum
3 lag value is taken to capture the problem of autocorrelation of the time series variables. During 2000-2023, as the
economic uncertainty decreases 1 percent of its negative growth the SDR increases by 0.009 percent annually. As
the GDP rises with 1 per cent of growth, the SDR increase with 0.173 per cent of its growth. Other variables
affecting the SDR are not taken in the model for analysis for the concentration on the objectives of the present paper.

Conclusion:-
Both research statements are rejected with strong statistical evidence and both the objectives of the present research
paper are achieved. Economic growth of India and economic uncertainty, both are significantly correlated with SDR
and there is a statistically significant impact of economic growth and economic uncertainty on SDR in India during
the study period. As the economic uncertainty is reduced due to strong economic policies economic development
takes the place and makes the sustainable development path in India. A strong economy can optimize the use of
natural resources and also can achieve the sustainable development goal in time. India is working for the same and
will secure the natural resources for the future as SDG 2015 is set.

References:-
1. Li, X., Hu, Z., & Zhang, Q. (2021). Environmental regulation, economic policy uncertainty, and green
technology innovation. Clean Technologies and Environmental Policy, 23, 2975-2988.
2. https://data.worldbank.org/indicator/NY.GDP.MKTP.KN?locations=IN
3. https://dashboards.sdgindex.org/profiles/india
4. Ahsan, T., Al-Gamrh, B., & Mirza, S. S. (2022). Economic policy uncertainty and sustainable financial growth:
Does business strategy matter? Finance Research Letters, 46, 102381.
5. Ahsan, T., Mirza, S. S., Al-Gamrh, B., Bin-Feng, C., & Rao, Z. U. R. (2021). How to deal with policy
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12. https://www.sd-commission.org.uk/pages/what-is-sustainable-
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eir%20own%20needs.%22.

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