After 10 years of impressive growth, India is now the fourth largest economy in the world. Yet, to date, India's impact on global commodity markets has been muted. The authors examine how India's domestic and trade policies have distorted and constrained its demand for commodities. They find that India's industrial policies have altered the expansion path of its economy, putting the service sector to the forefront and likely reducing India's demand for metals. Sector-specific policies, such as those promoting self-sufficiency in agriculture, have altered India's demand for food commodities and its supplies of those commodities to international markets. Recent policy reforms in manufacturing have boosted output, which coincides well with an increase in India's demand for metals over the past 4–5 years. Continued policy reforms are likely to diminish the distorting influence of India's domestic and trade policies. India's demand for energy and metals should rise as some rebalancing occurs in its economic structure.
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Paper provided by Bank of Canada in its series Discussion Papers with number
08-18.
Find related papers by JEL classification: F14 - International Economics - - Trade - - - Country and Industry Studies of Trade O13 - Economic Development, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
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