Abstract

In Odisha, infrastructure has influenced positively on gross capital formation which finally acted as catalyst to enhance per capita state domestic product in Odisha in a sustainable manner during 2004-05-2023-24. This analytical axiom has been econometrically tested by Auto Regressive Distributed Lag model with the help of Reserve Bank of India data during the specified period where per capita electricity availability(kwh) per year as infrastructure, and gross capital formation (in lakh rupees) per year are independent variables and per capita net state domestic product (in Rs) which is the indicator of development is considered as dependent variable. The ARDL (1,3,3) model is automatically selected where Akaike Information Criterion (AIC) became the least. The estimated equation of ARDL (1,3,3) revealed that one per cent increase in per capita availability of electricity has enhanced net per capita state domestic product by 0.706% per year significantly while gross capital formation has inverse influence on per capita net state domestic product in successive four years insignificantly. The long run cointegration was found by the F-Bounds test where the calculated F statistic (6.7917) is greater than the tabulated values of I (0) and I (1) at the significance level of 1%,5% and 10% respectively. The estimated error correction equations revealed that the incremental per capita availability of electricity in first period impacted on incremental per capita net state domestic product positively while the relation is negative in successive next two years. All are significant at 5% level. The relation between increment of gross capital formation and increment in per capita net state domestic product is negative and significant in the first year while the relation is positive in next two years where second year is significant and third year is insignificant. The cointegrating equation has been approaching towards equilibrium significantly at the adjustment rate of 41.29% per year. The cointegrating relationship states that one percent increase in per capita availability of electricity per year induced positively on per capita net state domestic product by 3.56% per year and one percent increase in gross capital formation per year induced negatively on per capita net state domestic product by 0.432% per year, all of which are significant at 5% level. The ARDL is stable because CUSUM (cumulative sum) line passes inside ±5% significant bounds. The residual test ensures that the model has no heteroscedasticity and serial correlation problems while Q-Q plots (Quantile-Quantile) rejected its normal distribution property. The model showed significant because AIC=-2.76 which is the least, R 2 =0.996, F=199.05, and DW(Durbin-Watson) =1.52 respectively. Even, the estimated Error Correction Model is highly significant where all coefficients except one are significant. Thus, both per capita availability of electricity and gross capital formation contain short and long run association with net per capita state domestic product of Odisha during 2004-05-2023-24 in both positively and negatively during the process of development as verified by ARDL model although OLS (ordinary least square) confirmed that one percent increase in per capita electricity availability per year enhanced the gross capital formation by 2.211% per year significantly.

Keywords: Per Capital Availability of Electricity, Gross Fixed Capital Formation, Per Capita State Domestic Product, Cointegration, ARDL