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Does Road Infrastructure Drive Income Growth? Panel Evidence on Roads, Power, and Structural Change in Indian States

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Author Affiliations

  • 1Department of Economics, Govt. College Mahendergarh, Haryana, India
  • 2Department of Economics, Govt. College Kanina (Mahendergarh), Haryana, India

Int. Res. J. Social Sci., Volume 15, Issue (3), Pages 43-53, July,14 (2026)

Abstract

The paper examines the role of road infrastructure in economic development using state-level panel data from 2004–05 to 2023–24. The paper uses static and dynamic panel methods for analysis. The paper observe that road density and power supply significantly increase per capita GSDP. The study also shows that improvements in power availability results in higher economic benefits than improvements in roads infrastructure. The fixed effects model estimates indicate significant short-run impacts of both road density and power availability. The dynamic System results suggest strong persistence in economic performance. It validates the presence of positive long-run effects of infrastructure on growth. Hausman tests indicate correlation between state-specific effects and infrastructure variables, justifying the estimation of fixed-effects. The findings suggest that although expanding road networks supports regional growth, improving power availability may generate higher economic returns. Therefore, infrastructure policy should be framed to match the economic structure of the state and more emphasis in needed to be on strengthening power infrastructure in lagging states.

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