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VOL. 8, ISSUE 1 (2026)
Impact of exchange rate on economic growth: Evidence from India
Authors
Swagata Saha, Dr. Sarbapriya Ray
Abstract
Exchange rate has been considered as one of
the crucial factors affecting the economic growth via GDP growth of any
country. The key objective of this study is to observe the effects of exchange
rate on the economic growth of India, considering also interest rate and
inflation as other exogenous variables for the period from 1996-2024.This study
uses ADF unit root tests, GMM regression, co integration test and Granger
causality test etc. The GMM method suggests that exchange rate has explicitly
favorable impact on economic growth in India; inflation has insignificant
positive impact on GDP growth in India; interest rate has significant negative
impact on GDP growth. The co integration test confirmed that GDP growth,
exchange rate, inflation and interest rate in India are co integrated,
indicating an existence of long run equilibrium relationship among them
as confirmed by the Johansen co integration test results. The Granger causality
test finally confirmed no causality among GDP and exchange rate and other related
variables like inflation, interest rate in any direction in India.
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Pages:91-95
How to cite this article:
Swagata Saha, Dr. Sarbapriya Ray "Impact of exchange rate on economic growth: Evidence from India". International Journal of Management and Economics, Vol 8, Issue 1, 2026, Pages 91-95
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