An Empirical Analysis on Two-Way linkages between Economic Growth & the Stock Market Development Kundu A #1 , Goyal A. K.* 2 , Rajput N.* 3 #1Assistant Professor Department of Economics Mathabhanga College Cooch Behar India, *2Professor Rukmini Devi Institute of Advanced Studies New Delhi India *3Principal (OSD) Sri Aurobindo College (E) University of Delhi, Abstract Development of the stock markets is important for economic development and growth. This research is an effective attempt to examine the significance of India's relation between economic growth and stock market development. The study covers the period from 1990-2018. The ADF Unit Root test findings indicate all variables of order one to be combined. Results of Cointegration reveal the existence of variables in a long-term relation. The findings of long-term estimations showed a strong and important relation between stock market and GDP. Short-term dynamics of the VECM revealed that the stock market had a strong short-term effect on India's economic development. Impulse Response Function (IRF) reveals how GDP reacts to a stock market impact. The findings showed that capitalization of the stock market has a beneficial effect on GDP. The decision makers must understand the capitalization of the stock market, the numbers in the economic growth. The research will help decision-makers consider the effect and value of stock market capitalization for economic growth measures in these economies. Key Words: Unit root test, VEC, VAR, Stock Market, Economic Growth, India Introduction As some economists argue, the stock market is thought to have an impact on a country's economic development, as it offers a forum where companies can raise capital to set up new ventures or expand their functions. Osho (2014) said that the share market has an important role to improve the efficiency of capital creation and distribution and allows companies and authorities to collect long-term assets that will enable them fund new projects or grow their operations. Jecheche (2011) considers the share market as providing the route for increasing firms to gather capital at a cheaper price, and, companies which are found in developed stock markets countries do not depend too much on the finance of bank, minimize credit threats. While stock markets are seen as a source of capital accumulation, they do not inherently have major impacts on economic development. Keynes quoted Mark (2000) and said "the stock market is not merely an efficient way of raising capital and advancing living standards, but can be compared to a casino game or game of chance." Arguments of Keynes are that speculators display intense short-term animal spirits as crises break out by selling bond securities in lieu of bonds. Ajit (2013) and Baotai and Ted et al (2005) gave inadequate proof to have relation from economic growth to stock market in the same vein. India's stock market comprises of two main stock markets, BSE, founded in 1875, & the 1992 NSE. Such two stock markets have grown but the object of the study is to explore to what degree they influence India's economic development. Specifically, the NSE and economic growth in India. Journal of Xi'an University of Architecture & Technology Volume XII, Issue III, 2020 ISSN No : 1006-7930 Page No: 79