Structural Changes in Indian Economy: An Empirical Analysis using Input-Output Structural Decomposition Analysis
The present study is an attempt to decompose the changes in output growth in India since 1983-84. For analysis purpose, study has bifurcated the whole period into two parts i.e. pre (1983-84 to 1993-94) and post (1993-94 to 2006-07) reforms period. Input-Output tables for the year 1983-84, 1993-94 and 2006-07 have been utilized for this purpose. Due to non-availability of recent Input-Output table, the analysis of the recent years (2007-08 to 2012-13) has been done using the data from different Economic Surveys provided by the Ministry of Finance, Government of India. The study utilized structural decomposition analysis to categorize the different sources of output growth. While comparing the two study periods, results show that for the primary sector (1 to 11) there is rise in private consumption and government consumption expenditure. However, percentage share of exports and investment expenditure in primary sector have declined over two periods. In secondary sector (12 to 44), there is a sharp increase in percentage share of all demand categories. For tertiary sector (45 to 58), the increase has been shown in investment expenditure, imports and exports only. Further, it is the average growth of final demand which holds the largest share in change of output growth over the study period. Among the five categories of final demand, domestic demand (sum of private consumption, government consumption and investment expenditure) is the dominant source of output growth in both the periods. It shows that Indian economy has a very strong domestic market.
