IDEAS home Printed from
   My bibliography  Save this paper

An empirical investigation on the inter-sectoral linkages in India


  • Kaur, Gunjeet
  • Bordoloi, Sanjib
  • Rajesh, Raj


For a developing country like India where socio-economic problems such as poverty,unemployment and inequality influence policy decisions, it becomes important to study interlinkages among the constituent sectors so that positive growth impulses emerging among the sectors could be identified and fostered to sustain the growth momentum. An in-depth understanding of inter-sectoral dynamics becomes all the more important for policy makers so that effective monetary, credit and fiscal policies could be designed in order to be able to achieve the broader objective of inclusive development. In this backdrop, the present paper endeavors to study inter-sectoral linkages in the Indian economy both through input-output (I-O) approach and econometric exercises using co-integration and state-space models. Cointegration analysis is carried out both at sectoral and sub-sectoral levels since mid-1980s. At the broad sectoral level, primary, secondary and tertiary (excluding community, social and personal services) sectors display strong long-run equilibrium relationship amongst each other. These sectors also display strong long-run equilibrium relationship with one another in a bivariate framework. At the sub-sectoral level, existence of long-term equilibrium was found between ‘trade, hotels, transport & communication’ and ‘manufacturing’ sectors. Further, the financial sector activity in the ‘banking & insurance’ sector was found to be co-integrated with the ‘manufacturing’ and ‘primary’ sectors. The sectors, which displayed long-run equilibrium relationships, were re-estimated through state space model using Kalman filter. This also corroborated that variation in one sector influenced the other sector’s performance over time. In view of the prevailing sectoral inter-relationships, the paper explores policy options so that positive growth impulses developing among the sectors are fostered.

Suggested Citation

  • Kaur, Gunjeet & Bordoloi, Sanjib & Rajesh, Raj, 2009. "An empirical investigation on the inter-sectoral linkages in India," MPRA Paper 40419, University Library of Munich, Germany, revised 2009.
  • Handle: RePEc:pra:mprapa:40419

    Download full text from publisher

    File URL:
    File Function: original version
    Download Restriction: no

    References listed on IDEAS

    1. Sangeeta Dhawan & K. K. Saxena, 1992. "Sectoral Linkages and Key Sectors of the Indian Economy," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 27(2), pages 195-210, July.
    2. Allan G. B. Fisher, 1939. "Production, Primary, Secondary And Tertiary," The Economic Record, The Economic Society of Australia, vol. 15(1), pages 24-38, June.
    3. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    Full references (including those not matched with items on IDEAS)

    More about this item


    Macroeconomic analysis of economic development; Input–Output Tables; Inter-sectoral Linkages; Agriculture; Industry; Services;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:40419. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.