Indian Economy: Selected Methodological Advances

This paper develops tools to examine selected major issues in the Indian economy. The studycomputes the potential growth rate of the economy and the agricultural sector, extends theanalysis of the fiscal stimulus and its effects, and estimates the short and long run elasticitiesof India's trade. This brings out the need for structural reforms in raising the potential growthrate of economy and that of agriculture to achieve a non-inflationary, high growth trajectoryfor the country. The fiscal stimulus effects indicate the importance of fiscal consolidationefforts to sustain high growth. The trade elasticities buttress the case for maintaining anappropriate real effective exchange rate.