Putting Structure on Structural Adjustment

Ashima Goyal The paper attempts to build a framework to appraise the structural adjustment programme (SAP). It is argued that while such a framework should work with macro-economic categories of aggregate demand and supply, it should incorporate structural features of the Indian economy, focus on the decisions of the firm over the medium run, and be capable of analysing the affects on growth, of macro-economic policies. Conclusibns follow that inflation is best managed by a set of policies that stimulate demand as well as supply. The possibility of multiple equilibria implies that a set of policies that act in concord to push the economy on a high growth path can lead to a situation where every group benefits. As the price of food is the nominal standard for the Indian economy, policies that effect the former are particularly important.