Structure of Indian economy and the linkages pattern

This present paper makes an attempt towards measuring technical progress through estimating input coefficients (technical coefficients) across various years. Such a measurement would shed considerable light on the trends in the rate of technical progress as an important source of growth in the Indian economy and lay to rest various speculations about the role of liberalization in promoting technological progress in the Indian economy. Such an effort would also make it possible to compare the two significant phases of the Indian economy: the ‘inward-looking’ phase and the ‘outward-looking’ phase. In the present paper many tools have been used to find out technological change and to identify the key sectors such as Chenery-Watanabe Categorization, in which, all the sectors of the economy are classified into four categories on the basis of U-W ratios. The study clearly finds that primary sector have low backward and low forward linkages with tertiary sector, high linkages with itself and average linkages with secondary sector. Secondary sector has low linkages with primary sector but high linkages with tertiary sector. Electricity alone has high linkages with all the three sectors. The capital intensive basic industries like iron and steel, electricity, non ferrous basic metals, construction, etc. are supposed to play the role of engine in the process of growth. Investment in these sectors can speed up the industrialization process; as such sectors will stimulate greater economic activities in other sectors.