Indian Economic Growth: Lessons For The Emerging Economies

Can we use neoclassical growth model to single out the important transmission channels through which external factors or 'Primitives' affected the Indian economy and caused the remarkable growth of the period 1982 - 2002? In this paper, the authors answer the question by applying the new technique of business cycle accounting to the Indian economy. The results show us that the primary conduit of policies that brought about significant growth in India was productivity that registered an unprecedented increase particularly in the 1990s. The results further indicate that changes in labour market frictions and investment market frictions did not play a significant role, though increased government consumption aided growth by propping up demand.