Journal Press India^®

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Saving is the engine for capital formation and hence economic growth. Causality among saving, investment and economic growth is a big debate and dilemma for current economist. Many economic theories have analysed and documented role of saving and investment in economic growth. However, factors except income and investment also significantly determine saving in India. Under this frontline, this paper attempts to determine factors that affect gross domestic saving in India. It is concluded from the paper that in the short run, lagged value of GDS and GCF and tax revenue as percent of GDP have a positive and significant impact on gross domestic saving. Similarly, exchange rate, current GCF and GDP have an insignificant and positive impact on Gross Domestic Saving. Consumption and both current and lagged inflation have significant and negative impact on gross domestic saving. But only real interest rate has a negative and insignificant effect on saving. In the long run, gross capital formation and tax revenue as percent of GDP have significant and positive impact on saving. But inflation and real interest rate have significant and negative impact on GDS. Similarly, exchange rate and GDP have positive and insignificant impact on saving. Only consumption determines saving negatively which is insignificant.

Keywords

GDS; GDP; GCF; Tax; Consumption; Inflation; Exchange rate; Real interest rate; ARDL; Co-integration

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