Institute for Social and Economic Change
Working Paper: 439
Income and Vehicular Growth in India: A Time
Series Econometric Analysis
India is one among the fastest growing economies in the world with an average growth rate of eight per cent of Gross Domestic Product in the last decade. The impact of increase in GDP can be observed in many sectors of the economy and transport is not devoid of it. Micro-economic theories firmly established the relationship between income and consumption having direct and positive impact. This can be observed in case of India’s per capita income and personal vehicular growth. In this line, the paper tried to analyse this relationship by compiling time-series data of total registered vehicles and personal income from 1960-2015. Since, vehicular population has influenced other important variables like urbanisation and employment, the paper tried to model their effect under Autoregressive - Distributed Lag model (ARDL) and proves their long run co-integration.
Though increase in income and vehicles tend to show positive sign of economic growth, its negative implications cannot be ignored. The paper also brings out the emergence of negative externalities of growth of vehicular population by way of deteriorating air quality of the country, which has affected the GDP. World Bank (2013) estimates show that three percent of GDP is lost due to air pollution in India which is commonly attributed to vehicular emission