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Impact of Economic Reforms and Macroeconomic Forecasts

The Indian economic reforms of 1991 affected the economy not only in terms of output but brought about some structural changes in the various macroeconomic relationships. We quantify here the impacts and identify which of the macro variables were significantly affected and which could not be the result of the reforms. For the analysis, the technique of interventions analysis of time-series is used. Two kinds of measures are noted: (a) the year-to-year effects, and, (b) the overall growth pattern, during 1991 to 2002-03 due to reforms for each of the variables. Private final consumption expenditure (PFCE), investment (GCF) and all the GDP variables except that of services were found to be substantially higher during the post-reforms period than what they would have been in the absence of the reforms. The reforms seem to have made only a marginal impact on investment in the agricultural sector. Unless more reforms are brought in, the GDP may grow at the most only by 6.1 per cent between 2003 and 2010.

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