Does Economic Growth Reduce Crime? Evidence from India Using an ARDL Model

Crime is one of the major persistent social challenges faced by developing economies coexisting alongside economic growth and social transformation. This study analyses the short-run and long-run factors such as Gross Fixed Capital Formation (GFCF), Government Expenditure, Inflation, Rule of Law, and Population Growth which affect crime in India using annual time-series data from 1995 to 2022. The study uses the Autoregressive Distributed Lag (ARDL) modelling approach which is well-suited for variables with mixed order of integration and examines both short-run and long-run relationships among the variables. The results reveal that sustained investment acts as a protective barrier and significantly reduces crime in the long-run. In contrast, Government expenditure has mixed short-run effects but a positive long-run impact on crime highlighting the need for effective and efficient composition of public spending. Inflation is one of the major factors causing crime with a lagged effect and improvements in the rule of law can significantly reduce crime occurrence in the nation. Population growth also shows a significant long-run relationship with crime indicating the importance of demographic pressure. Overall, the findings suggest that crime is not only a result of underdevelopment but is also influenced by the quality of growth, government effectiveness and macroeconomic stability. The study also provides policy recommendations for promoting inclusive development and ensuring social stability along with economic growth.