Sources of growth and structural change in input output system in India: Estimating temporal leontief inverse

The objective of this study is to look into the sources of high growth and the pattern of structural changes as observed during the post-reform period in India with input output data. The contributions of final demand, technological progress, and the synergistic interaction of final demand and technological progress to output growth have been examined by analysing temporal Leontief inverse. The absorption matrix is used for 1993–94, 1998–99, 2003–04 and 2007–08, covering the post-reform period in India, to calculate the coefficients of linkage effect, both backward and forward, from Leontief inverse obtained from the coefficient matrix. This study observes that manufacturing had stronger backward linkage effect as compared with other sectors during the post reform period. While the growth enhancing effect of construction and electricity improved during the late 1990s, the effect of the services sector declined significantly during the same period. The contribution of agriculture to economic growth also increased in the late 1990s, but declined thereafter. The forward linkage effect, measuring the growth of a sector owing to the expansion of demand for other sectors, was significantly higher for the infrastructure sector including construction, electricity, water and gas, followed by the services sector. However, the rate of expansion of the services sector caused by the expansion of the other sectors declined after reforms. The output growth in almost every sector was demand led during the period 1993–2007.