Exports, Imports and Economic Growth in India.

With the advent of WTO, India entered into the era of trade reforms in 1991 and is moving gradually towards an open economy. It is widely believed that export and import growth is crucial in providing the impetus for economic growth in developing countries and imports provide the important 'virtuous' link between trade and output growth. Therefore, our aim, here, is to address the export/import-led growth and growth-driven export/import hypotheses for India. In spite of some ambiguity, the results clearly show that exports and imports Granger-cause GDP, both individually and jointly, lending support to the export/import led growth hypotheses. There is also some indication of GDP and exports jointly Granger- causing imports, and GDP and imports jointly Granger-causing exports, but the growth driven export/import hypotheses seem implausible. A possible reason for the results is the favourable trade environment of India.