Dr Mrutyunjaya Sahoo, Assistant Professor in the Department of Management at the Paari School of Business (PSB), has published a research paper titled “Examining the Nexus Between Diverse Forms of Capital and Labour Force Employment in Driving Economic Growth: Evidence from India” in the Q1 journal Global Business Review with Impact Factor 1.9. The study provides empirical evidence emphasising the importance of integrating multiple forms of capital through well-designed policy interventions. It further underscores the critical role of public–private collaboration in infrastructure development to enhance regional connectivity, improve economic efficiency, and foster inclusive and balanced growth across India.

Strengthening the interaction between diverse forms of capital—namely physical, human, and infrastructural capital—and effective labor force participation is essential for accelerating economic growth in India. Recognising this, the present study employs an extended Solow growth framework to examine how these factors collectively influence economic performance across Indian states. By analysing the dynamic relationships between capital accumulation and labor engagement, the research aims to explain the varying growth trajectories observed at the regional level.

Brief abstract 

This study employs the extended Solow growth model to comprehensively examine the nexus between diverse forms of capital and labour force employment in driving the economic growth of India. It includes a range of capital types, including physical, human and infrastructural, as well as labour force employment across 17 major Indian states. The empirical investigation adheres to a structured methodology using panel data: first, a degree of homogeneity test is conducted for each panel. Second, the cross sectional dependence (CD) test is examined across panels. Third, second-order panel unit root tests applied to the variables exhibit non-stationarity at their levels, while they attain stationarity upon taking their first differences. The final Solow growth model, which embodies panel fully modified ordinary least squares (FMOLS) and dynamic ordinary least squares (DOLS) models, is applied to examine the impact of various forms of capital and labour force employment on state-wise economic growth in India. Capital formation in the form of physical, human, and infrastructural plays a crucial role in driving positive long-term economic growth across Indian states.

Thus, revamping state-level fiscal coordination through efficient revenue mobilization and expenditure management is crucial for sustaining development. The study provides a nuanced understanding of the intricate dynamics influencing states’ economic growth in India, shedding light on the interconnected leading role played by capital formation and labour market dynamics in nurturing sustainable economic growth over the long run. It emphasises the importance of infrastructure spending and investment in human and physical capital to achieve permanent and sustainable growth in India.

Practical implementation the research 

The outcomes highlight that the determinants of economic growth in India operate unevenly across states, shaped by variations in institutional quality, sectoral composition, labour characteristics, financial depth and infrastructure availability. In this context, policy design must shift towards more state-specific and context-sensitive strategies. First, tailoring interventions to each state’s industrial structure, demographic profile and institutional capacity would ensure better alignment between policy objectives and local growth drivers. Second, enhancing administrative capacity and improving coordination across departments are essential for translating national initiatives into measurable outcomes on the ground.

Third, states with low human capital indicators require targeted efforts in skill enhancement, education and digital inclusion to complement infrastructure and industrial policies. Fourth, strengthening credit transfer, digital finance and local entrepreneurial ecosystems can accelerate capital formation and employment generation in lagging regions. Finally, improving state-level fiscal capacity through efficient revenue mobilisation and expenditure management is crucial for sustaining development. Overall, promoting balanced and sustainable growth in India requires recognising regional diversity and designing policies that respond to the distinct economic realities of each state.

Collaborations

This research was co-authored with Dr Shiba Prasad Mohanty and Dr Neha Parashar and belongs to both of them, Symbiosis School of Banking and Finance, Symbiosis International (Deemed University), Pune, Maharashtra, India.