Indian Economy: Selected Methodological Advances

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