India's exports of capital goods an evaluation

Abstract

This paper evaluates the recent performance of Indiazs capital goods exports and finds that it is not so impressive in comparative terms. It also analyses the determinants of exports using econometric techniques and develops an equilibrium model of simultaneous equations. Exports demand is found to be inelastic, but supply is elastic with respect of prices. The findings suggest that to increase volume of exports along with appropriate value realisation, a judicious mix of policies, e.g., devaluation and exports subsidies, should be pursued. The econometric model is also used to evaluate whether the recent government policies have made any impact.