Global Journal of Management and Business Research, B: Economics and Commerce, Volume 22 Issue 4

© 2022. Dr. Shreya Raval & Dr. Prakash Salvi. This research/review article is distributed under the terms of the Attribution- NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0). You must give appropriate credit to authors and reference this article if parts of the article are reproduced in any manner. Applicable licensing terms are at https://creative commons.org/licenses/by-nc-nd/4.0/. Global Journal of Management and Business Research: B Economics and Commerce Volume 22 Issue 4 Version 1.0 Year 2022 Type: Double Blind Peer Reviewed International Research Journal Publisher: Global Journals Online ISSN: 2249-4588 & Print ISSN: 0975-5853 How Political Stability Affects Economic Growth in India By Dr. Shreya Raval & Dr. Prakash Salvi Abstract- This paper attempts to answer the question – ‘Whether the economic growth in India is affected by stability at the Central and States level political stability?’ A Political Stability Index (PLSI) is constructed using four political stability measures at Central and States level for both the Houses of the Legislatures. This index, the independent variable, is tested on two dependent economic growth variables Per Capita Income and Gross Capital Formation. The time for the study is 1981-2017 (37 years) at India (Central) level and 1991-2015 (25 years) at the States level according to the availability of data with a lag period of 1 year, as policies bear results, the following year. The analysis very modestly supports the hypothesis at the Central level. However, the impact is more robust at the States level, evident from continuous governmental stability of many States. Principal Component Analysis method is used to construct the index and then Regression Analysis is used to measure the impact on dependent variable. GJMBR-B Classification: DDC Code: 338.47624 LCC Code: HD9715.A1 HowPoliticalStabilityAffectsEconomicGrowthinIndia Strictly as per the compliance and regulations of: