1. Introduction
This section defines a systematic approach using tools and techniques of research to carry out a research project (Jha, 2008; Kothari, 2004; Newman & Benz, 1998).
2. Research Approach
The research aims to base the underlying study on quantitative approach for data collection. Quantitative methods will be utilized for the collection of theoretical data? A statistical analysis (linear regression analysis) will be conducted to achieve this purpose with the help of the secondary quantitative data relating to chosen economic indicators in India. Past studies can also have some numeric information and inference as well. This way, the study will be able to develop an analysis of collected information while numbers and findings will lead to the precise information (Neuman, 1997; Bernard, 2000; Wigren, n.d.). Additionally, the quantitative method will be used for the collection of numeric data relating to variables selected for the research in hand. The discussion chapter will use quantitative information from prior chapters i.e. numerical information from the survey and the quantitative information about selected economic indicators in the underlying region from authentic resources for extracting useful insights from the study.
The main purpose of using mixed method is the researcher’s aim to be exact about the results and be able to generalize them along with exploring the research into different dimensions and explaining the collected data from every critical angle. Furthermore, quantitative information will help researcher have an exact approach to data analysis, as it is one of key characteristics of numerically collected data (Kothari, 2004).
As for the choice between the inductive and deductive type of research approach, the researcher opts for deduction, as it perfectly aligns with the objective of the research. There is no intent to perceive any new idea rather the research sets out to test an existing theory i.e. fluctuation in oil prices are about the Indian economy. The inductive approach to research is rather suitable for high level research in science and philosophy (Glaser, 2014; Baker, 1988; Cargan, 2007).
The researcher aims to study the impact of fluctuation in oil prices on Indian economy to assess its implications on developing countries. For this purpose, he sets out to conduct the research using quantitative methods of data collection and analysis. A statistical analysis will be conducted with the help of the information collected from authentic websites on economic indicators in India. These economic indicators are considered dependent variables that include payment of balance in India, inflation, GDP growth rate, and exchange rate. Since changes in oil prices and economic indicators involve quantitative considerations, quantitative method is seen as appropriate to the key objectives of the study. Selected variables are also relevant, as they are generally affected by changes in oil prices (justified later).
3. Research Variables
3.1. Independent Variable
Change in crude oil
3.2. Dependent Variables
GDP growth rate in India
Inflation rate in India
Exchange rate in India (with USD as oil prices are taken in USD)
Balance of payments in India
In might be an idea to discuss in this the period over which the data is considered
Oil prices have a direct and indirect impact on almost entire economy. The above-selected variables are likely to receive impact of change in oil price. Hamilton, (2003) in a comprehensive research discussed the impact and referred that fluctuation in oil prices has referred that there is a debate on the relationship between the oil prices and the GDP, which is a most widely used indicator of the economy. Example of oil price on the whole economic process and in the specific context of India is depicted as follows:
(Prasad, Choudhary, and Sahgal, 2015)
4. Data Collection
Secondary method of data collection will be utilised for the research in hand each having its own merits and demerits (Olsen, 2012; Weller & Romney, 1988; Daugherty, 1974; Czarniawska, 2014; Axinn and Pearce, 2006).
Secondary information will be gathered from relevant authentic electronic sources (websites) and from the research providing organisations such as PwC. KPMG etc. The sources utilized for this purpose such as Statistia, IMF, World Bank, Trading Economics, etc. are considered some of the most authentic and reliable sources of information.
On the other hand, numeric data will also be collected from secondary mediums of research. These sources of data will be different from what would be utilised for the collection of qualitative data. Since quantitative data deals with the information about different economic measures such as inflation, GDP growth, etc., it is considered ideal to the source to authentic electronic mediums such as government and other authentic websites like World Banks, IMF, EIA Trading Economics, Statistic, and other reliable web-platforms helpful in this regard.
It is also important to development information related to variables’ units. Specific to the oil prices, the study will collect information on the Crude oil presented in the Brent benchmark. In contrast to the other benchmark of WTI, which is cheaper also, Indian companies prefer importing oil in Brent. Indian companies prefer Brent over WTI because in their view the inconsistency on the price between the two is a short term phenomenon. While, the impact produced by different factors related to American WTI crude oil brings price difference to the point where investment often become worthless (Mishra, 2015). Furthermore, the oil prices will be taken as the average of the period, so the impact of extreme incidence on oil prices in different times are accounted along with the post incidence price corrections. For the other variables, like GDP, etc. their standards units will be used. Like inflation and GDP are always presented in percentage etc. Hence, standardised units will be employed. USD will be used as standard currency (unit) to evaluate changes in selected economic indicators over chosen timeframe.
The population for the research is the oil prices and the trends in economic variables since they are reported in India. Here, it is important to mention that the purposive method of data collection will be used for the sampling. Purposive sampling will be used, because the researcher has an intention and objective of exploring the resulting impact of the oil prices on the macroeconomic variables in India. With this purposive sampling, the time frame is also selected with a rational (discussed in next section). The data for the oil prices on different sources is presented in the USD; therefore, this unit will be used for the oil prices. The USD is also a justifiable selection as the trading in the international market is widely concerned in dollars. Also, the price per barrel will be taken, and the reason for the selection of “barrel” unit of quantity of measurement is the fact that barrel is widely used the unit for the purpose.
5. Time Horizon
It is essential to devise a decent trend to investigate exactly the impact of changing crude oil price on dependent variables. For this purpose, it is considered wise to determine the timeframe. The study will use the time series data as it intends reviewing the trends showing in the economic indicators of India as a result of changing trends in the oil prices (Miller, 1998). Since 1979, the rise and fluctuation in following years after 1979 are inconsistent as shown in the image below: √ good
(statista, 2016)
Based on the trend, it was decided to take the data beginning from 1979. However, different sources for oil prices data have limited information for Brent benchmark beginning from 1987 and onwards (EIA, n.d. and Fred, 2016). The decision is then changed to take data from 1987 onwards to latest reported quarter. The data was initially planned to be collected on a quarterly basis. It had a consideration that annual data from 1987 today will not have sufficient information or sufficient number of observations. Furthermore, data collected on a quarterly basis will have more deep insights to offer as the oil prices have been fluctuating significantly since recent past. Oil prices began declining two years ago i.e. in 2013 (Krauss, 2016; Bowler, 2015). Hence, the data will take almost all possible impacts on the Indian economy as a result of changing oil prices.
Furthermore, the mid of year data from June will be taken. It is selected to be so as data for the starting year does not have information for the beginning month while latest year also does not have information for the end of the year results. Hence, mid of year data (June) will be used so as to account for the higher number of observations (EIA, n.d. and Fred, 2016). However, reviewing the quarterly data for economic variables of India, it was found that it had limited information available. Hence, despite extensive intention of taking quarterly information, the researcher will have to switch to annual information for all the variables. Therefore, time series data for economic variables and oil price will be taken from 1987 to 2015 on an annual basis from World bank and EIA. Through this method, the researcher will be able to collected minimum 30 observations from chosen sources relating to GDP, inflation, exchange rate, and balance of payments in India.
6. Data Analysis
It is very important for a researcher to develop data analysis in a careful way because it serves as a base for conclusion and suggestions for future research (Kumar, 2005). For the proposed research, the researcher is going to use two scales of measurement including analytical analysis and synthesis.
The first tool used for analysis is analytical analysis because the study is based on analytical survey. The impact of changes in independent variable (crude oil price) within a predetermined period of 28 years i.e. from 1987 to 2015 will be studied on different independent variables. Through linear regression analysis, it will be determined in a quantitative manner how far and in which current direction decline in oil prices (which is an independent variable) has an impact on different dependent variables relating to the Indian economy.
The discussion will be supported by trends so that points of core interaction can be determined. the study will then test the linear regression taking oil prices as the independent variable and economic variable individually as the dependent variable for extending the results of the study for precise information.
After analysing the quantifiable data through statistical method, the researcher will check the results in the background of numeric information collected from chosen electronic sources. The synthesis between secondary information and statistical findings will add to the significance and reliability of the research to a great extent. The latter part of data analysis will be critical and based on explanatory discussion. Status of a hypothesis (i.e. supported or unsupported) will be determined after checking the linkage between basic ideas and the quantitative results. The direction of a high percentage of results will provide clues towards reaching a generalised and conclusive opinion. It is important to mention here that the results of the study will lack generalise-ability as the impact is reviewed in the context of India and results produced from India indicators will not have applicability elsewhere. Furthermore, the specific type of benchmark is used and so countries not using this benchmark may not have aligned results.
It is not necessary to waffle a lot, just mention that the research uses a statistical method of analysis, based on the estimation of regression equations and this is an appropriate evaluation method when that data surveyed is quantitative and where the impact of a variable on another is sought.
Ethical Consideration:
The research will follow proper code of conduct and the researcher will ensure the best compliance with the following ethical consideration while carrying out the study being proposed:
There will be no attempt at intellectual property theft and all the data collected from secondary sources of information will be cited and referenced properly.
The researcher will keep his bias (if any) suspended throughout the process of research and data will be collected, interpreted, measured and presented in its original form and without any modifications.
The researched will keep the personal thinking and feelings suspended throughout the process of data collection and analysis, and the results will base on define scale of measurement.
Limitations:
It is rare to have a research project without its limitations, so the same applies to the research being proposed. Some of the most vital weaknesses of the study are described below:
The study may not be applicable in the long run (as mentioned earlier), as external factors relating to the resources of energy are unpredictable.
The impact of crude oil price decline on India’s economy may not generally be applied to all the developing economies of the world. There may be some specific patterns and influential factors specifically associated with India playing the role of mediator in the relationship between oil prices and economy
It is hard to access how much of other factors are involved in the decline or improvement of Indian economy than changes in oil price in the current scenario.
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