Indian Economy: Selected Methodological Advances

This paper develops tools to examine selected major issues in the Indian economy. The study
computes the potential growth rate of the economy and the agricultural sector, extends the
analysis of the fiscal stimulus and its effects, and estimates the short and long run elasticities
of India’s trade. This brings out the need for structural reforms in raising the potential growth
rate of economy and that of agriculture to achieve a non-inflationary, high growth trajectory
for the country. The fiscal stimulus effects indicate the importance of fiscal consolidation
efforts to sustain high growth. The trade elasticities buttress the case for maintaining an
appropriate real effective exchange rate.