Structure of the Indian economy: An inter-industry approach

The analysis of sectoral composition of Gross Domestic Product (GDP) in India shows a growing ‘tertiarisation’ of the structure of production. One of the best ways to examine the structural relationship among the sectors in an economy is the Input-Output approach. This technique provides valuable insights into the interdependence of various sectors. Towards this end an inter-industry approach has been employed. ‘Chenery & Watanabe’ method is used to study the structure of the economy. ‘Yon & Ames’ methodology is applied to examine the economic interdependence among various sectors. ‘Rasmussen Backward & Bulmer-Thomas Forward Linkages’ are put to use for specification of key sector of the economy and ‘Richardson’ method is used for the estimation of output and income multipliers of different sectors of the Indian economy. The production structure and interrelatedness exemplify the nature of production in India. Under the key sector argument manufacturing sector has an edge over others in the economy.