Energy and infrastructure needs in India: An input-output analysis

In the changed economic environment of India, adequate quantity, quality and reliability of infrastructure are going to be the key determinants of the growth of the overall economy and exports. Impact of the different sectors in the economy on primary energy and infrastructure sector needs a prior analysis for future policy formulation. Based on the information derived from the energy and infrastructure multipliers, economic planners can better evaluate development alternative in a logical and quantitative manner. Before presenting the energy policy by economic planner or public policy maker with a wide range of development alternatives, the consequences of these alternatives on energy and infrastructure demand should be assessed. In the present work we consider some traditional economic multipliers and non traditional economic multipliers like energy multipliers, infrastructure multiplier etc. in assessing the impact of India's economic growth. Input -output technique has been adopted as a method of analysis. This analysis could help us to know the change in energy use/ infrastructure use due to one unit change in the respective use across sectors. Main findings of the study are: even though direct primary energy use is the highest for infrastructure sector the energy multipliers within closed economy is the highest for the mining sector (99.56) being closely followed by agriculture (38.74), equipment industry (14.44) and so on while for infrastructure sector it is only it is only 3.16. Even though the direct infrastructure requirement is highest for the other services sector the infrastructure multiplier is the highest for the mining sector (19.80) being followed by the energy product sector (8.20) food products industry (6.66), primary energy sector (5.56). Policy implication of the findings are far reaching. Since energy and infrastructure are consumed not only as final products but also as derived demand in intermediate products, energy and infrastructure multipliers reflect the indirect impact of direct energy use in the context of sectoral interdependence.