Towards Atma Nirbhar Bharat: An Exploration of Linkages and Leakages

Abstract

Countries across the globe have undertaken unprecedented fiscal actions in response to the COVID crisis. India has also announced several rounds of fiscal stimuli under the umbrella scheme of Atma Nirbhar Bharat mission. In this context, it is important that the policy interventions are aligned with the production structure of the economy so as to reap maximum benefits. This paper uses input-output analysis to identify the major sectors of the economy based on the sectoral multipliers. By taking into account the distinction between domestic and imported intermediates while computing the linkage measures, it ensures an accurate measurement of multipliers. The paper also investigates into ‘leakages’, i.e., the change in intermediate imports associated with a unit change in domestic production. The interaction between linkages and leakages is analysed, which reveals two distinct patterns – in the case of services, higher intermediate imports are associated with higher domestic linkages, while the opposite holds for the industry. The paper also identifies the sectors for export promotion and the sectors where domestic capabilities need to be developed for supply chain resilience.

Keywords: input-output analysis, sectoral multipliers, key sectors, leakages

JEL Classification: C67, D57, F19