A Comparative Study on Inflation and Gross Domestic Product (GDP) Between India & China in the Recent Scenario

Abstract

Economic growth is one of the attainments of any country and has the necessary potential to increase national income and enhance the living conditions of the people. The country's economic growth will be generated by macroeconomic policies like monetary, fiscal policy, and other economic measures undertaken by the policymakers of the country. Economic growth will be influenced by several factors, inflation will be one of the factors in the economy. Economic growth and the rate of inflation have a very complex relationship. There are empirical study results showed positive, negative, and neutral relationships between economic growth and the rate of inflation. Further, a high or very low rate of inflation will hurt sustainable robust economic growth and have a vital negative effect on the economy. This study has investigated the Inflation and Economic Growth relationship in India & China, countries that highlighted long–term moderate rates of inflation (less than 5%). Analyses like descriptive Statistics and the OLS model have been applied to India & China for the period between 2010 -and 2022 exhibiting that inflation and real GDP have a very weak positive relationship with India. On the other hand, china's economy has kept a moderate relationship between inflation and real GDP during that time. It has been established that India and China's economies have progressive and insignificant effects of inflation on real GDP in the study period. Finally, the study has concluded that the low rate of inflation alone is not a determined factor of a country's economic growth. It will be influenced by many other factors.