Measuring Energy Linkages in the Indian Economy: An Input-Output Analysis
35 Pages Posted: 12 Apr 2016
Date Written: 2015
In view of the varying energy intensities of different sectors, the implications of sector-wise output expansion differ in terms of the corresponding energy requirements.
Objective: The present paper attempts to analyse the changing energy use through measuring intersectoral relationships in the Indian economy.
Scope: The scope covers net effect of changes in technology and prices across sectors.
Method: Strength of the sector-wise linkages is quantified through relationships between material inputs and output of a sector using Input-Output model. Further, the interrelationships among the industries are analyzed using the Multiplier Product Matrix.
Major findings: The energy landscape of the economy is observed to have transformed. The effect of changing linkages of the energy sectors is characterised by a strong propagation effect of the petroleum product sector. Additionally, each of the individual energy sectors have high dependency on the service sector due to insurance, banking and financing requirements of the capital intensive energy sector.
Policy relevance: A carefully planned and monitored petroleum product sector has strong impact on the Indian economy. Unlike other energy sectors, the petroleum products have a balanced position in the economy. Policies that stimulate output should be carefully formulated to minimize the externalities arising mainly from import leakages.
Keywords: Input-Output, Linkages, Multiplier Product Matrix, Energy
JEL Classification: C67, C57
Suggested Citation: Suggested Citation