The basic objective of this study is to evaluate the comparative static effects of selected trade and domestic policy reforms on trade, output, domestic prices, economic welfare and intersectoral allocation of resources. The major reforms analysed in this study relate to reduction in tariff and non-tariff barriers to trade along with rationalisation of the tax-regime. A computable general equilibrium (CGE) model of the Indian economy has been constructed for the purpose of analysis.
The present working paper documents the India CGE model of production, trade and employment and is capable of evaluating the comparative static effects of selected trade and domestic policy reforms on output, trade, factor prices, economic welfare and intersectoral allocation of resources. It is a single country (versus rest-of-world) multi sectoral model. The major source of inspiration has been the multi-country structure used in the Michigan Brown-Deardorff-Stern (BDS) CGE model of world production and trade.
The process of major economic reforms undertaken in the Indian economy has completed nearly five years of implementation. The economy has entered into a new phase of development directed towards becoming globally competitive through the opening of trade, foreign investment, and technology inflows. The unilateral reform measures in the industrial and the trade policies of India along with reforms in the tax-regime represent a significant departure from the policy framework of the past four decades and are important to the future course of the Indian economy.
The basic objective of this working paper is to evaluate the comparative static effects of selected trade and domestic policy reforms on trade, output, domestic prices, economic welfare and intersectoral allocation of resources. The major reforms analyzed in this study relate to reduction in tariff and non-tariff barriers to trade along with rationalization of the tax-regime. A computable general equilibrium (CGE) model of the Indian economy has been constructed for the purpose of analysis.
This paper reviews methodologies that have been in vogue for some decades in studies concerning supply response in agriculture. In supply response studies, one has to view output supply and factor demand functions (and perhaps, institutional constraints) in a simultaneous equations framework. It is in this context that different models that are generally used in such studies are evaluated. These include models using different functional forms such as the Nerlovian model, i.e. an adaptive expectations-partial adjustment framework, the multinomial logit model, the time series-cross section model, the profit function model, and the frontier production function model.
This paper is part of an ICRISAT-NCAER collaborative study on “Changes in cropping Patterns and Resource Use Efficiency in the Semi-Arid Tropic of India: The Role of Price and Non-Price Factors”. We are grateful to the Ford Foundation for funding this study and for presenting an opportunity to work collaboratively with ICRISAT. The NCAER team is lead by Dr. Ashok Gulati, while Dr. T.G. Kelly as the project leader at ICRISAT. The author has worked under the guidance of both team leaders.
Expert Group on the Commercialisation of Infrastructure Projects
NCAER has long been the only agency outside the government with the capability of conducting large scale household surveys. Securities and Exchange Board of India (SEBI) requested the NCAER to carry out a survey of Indian investors in order to estimate investor population, their investment preference and to gauge the impact of the growth of the securities markets during the last decade of economic reforms. The terms of reference of the study were to estimate the number of household and the population of individual investors, their economic and demographic profile, portfolio size., investment preferences for equity as well as other saving instruments. The study was also designed to elicit information from households on their risk perceptions, experiences in investing in security market, return on investment and the like. Other areas to be covered included awareness of investor rights, experiences with grievance redressal mechanisms; indications of investors’ future plans of investment and their expectations from the securities market were also obtained. The study also provided estimates of non-investor households and population, their economic and demographic profile, their pattern of investment in various instruments and reasons of non-investment in the equity market.
This report was submitted by members of an Expert Group under the chairmanship of Dr Rakesh Mohan
Volume 1
The India Infrastructure Report: Policy Imperatives for Growth and Welfare: Volume-I
The Executive Summary
Volume 2
The India Infrastructure Report: Policy Imperatives for Growth and Welfare: Volume-II
The Main Report
Volume 3
The India Infrastructure Report: Policy Imperatives for Growth and Welfare: Volume-III
Sectoral Reports
In the past, growth models have been constructed and analyzed with the help of a production function subject to certain restrictive features. For quite some time, the Cobb-Douglas production function (CD) with its input exponents adding upto unity and a unitary elasticity of substitution were mostly used by the economists for analysis. In recent times, the constant elasticity of substitution production function (CES) which includes CD, as well as Leontif production function as its special case has been widely used in various studies. One major limitation of this production function is that the elasticity of substitution parameter is not variable along an isoquant, though it can take different values for different values for different industries.
We have made an attempt to test whether the estimated values of elasticity of substitution between labour and capital for a sector tend to change from one year to another and also whether it is CD or CES production function that characterizes a particular sector.
