ABSTRACT

Purpose:The purpose of the study is to examine the determinants of foreign direct investment inflows into India and its impact on gross domestic product of the economy. The study also indicates the trend of foreign direct investment inflows in India since 1991-2016.

Data source:The study use the secondary data collected from different sources like, United Nations Conference on Trade and Development, World Bank, International Monetary Fund.

Study period:The study period isfrom 1991 to 2016.

Methodology:The study applies regression model for empirical analysis. For accurate results of the econometric model small variances is required.  In order to minimize the variance from variables we have taken log of the variables. The least square method is used for the estimation of relationship between the dependent and independents variables. For checking Multicollinearity among the independent variables correlation is used. The Breusch-Godfrey Serial Correlation LM Test is used for testing autocorrelation and Breusch-Pagan-Godfrey test is used for testing the Heteroskedasticity in the residuals.Jarque-Bera test is used for testing the normality of the data.

Findings:The study finds that there is a positive relationship between foreign direct investment and gross domestic product of the economy. The study also finds that there is a negative relationship between foreign direct investment and inflation (CPI).