Abstract:
India is still in the early stage of development and therefore intersectoral linkage analysis is of timely importance to reach higher
economic development levels with a proper institutional set up and
policy of the country. This paper explores inter sectoral growth
linkages among the agriculture, industry, service, and the export of
India and identifies the role of each sector growth in the economic
development of the country. Vector Auto Regression (VAR) model
based on Johansen co-integration method was employed along with
Granger Causality Test in order to examine inter sectoral linkages
of India by using data from year 1961 to year 2017. On one hand, it
was shown that the agriculture sector had provided a positive
impact on the service sector growth with a comparatively large
magnitude in the Indian economic development. The export growth
also had made a positive link to the agriculture sector growth. On
the other hand, India’s industry and service sectors did not make
any spillover on the other sectors to stimulate its economic
development except their direct impact through their own growths.
Therefore, India’s strongest sector in making links with other
sectors is the agriculture sector followed by the external sector
(export).
