Goods Versus Services Production In The Indian Economy: Projections For 2020 Based on Study Period '1970-2010'
Posted: 12 May 2020
Date Written: June 1, 2019
Abstract
India, at present, is the fastest growing country of the world, replacing Peoples’ Republic of China. The economy of India is the seventh-largest in the world by nominal GDP and the third-largest by purchasing power parity (PPP). This phenomenal achievement amidst economic slowdown worldwide has kept all eyes open towards the functioning of the Indian economy. Most interestingly, this phenomenal achievement of India has come through following an apparent ‘ahistorical’ path of ‘Services led Growth’, in sharp contrast to the ‘Stylized Facts of Growth and Development’ prescribed by Kuznets (1966, 1971), Clark (1940), Chenery and Taylor (1968) based on the experience of (more than 200 years, starting from 1765 up to 1967,) ‘Manufacturing led Growth’ path followed by the then developing and presently developed countries of the world. Naturally in this paper, firstly we have tried to find out the ‘Take off’ point of the Indian economy through an analysis of structural change in terms of the GDP of India and its’ sectoral distribution across the three major sectors, viz., primary, secondary and tertiary sectors. Then there is a brief comparison between the growth regime of the ‘Pre-Take off Stage’ and ‘Post-Take off Stage’. Then there lies a possible explanation of the Structural Change following the Input-Output Analysis. Finally, we have used a new technique, comprising an assimilation of the ‘Box-Jenkins ARIMA methodology and Input-Output methodology, to forecast India’s percentage distribution of GDP across its aforementioned three major sectors for the years 2011-12, 2015-16 and 2019-20.
Keywords: Structural Change, Chow Test, Unit Root Test, Endogenous Structural Break Analysis following Bai and Perron, Zivot and Andrews and Amit Sen, Structural Change in Input-Output framework, Box-Jenkins ARIMA Methodology, Input-Output Projection analysis.
JEL Classification: C22, C67, O14, O50
Suggested Citation: Suggested Citation