An Analysis of Sources of Growth in the Indian Economy

Abstract

This paper attempts to analyze sources of output growth in the Indian economy using Input-Output based Structural Decomposition Analysis over the period 1993-4 to 2003-4. The decomposition results show that overall output expansion of the economy was primarily driven by increase in domestic demand followed by export expansion. At the aggregate level, import liberalization contributed to output expansion. Contribution of improved technology is realized through changes in input-output coefficients and has been rather limited. It can be said that easier and cheaper access to better quality imports, had a rather limited technological change at an aggregate level. However, the relationship between the two sources varied at sector level.