Macroeconomic Modelling for the 11th 5-year plan in India

Planning Commission has put up this amazing report on its website (very heavy nearly 24 MB). It includes the various macro models used for eleventh plan.

There is an excellent summary of the models and their findings by Kirit Parikh. He also lists various macro models in general and explains them simply. Plus there is an appendix which details the various macroeconomic models used in all the eleven plans so far. I have read the intro chapter by Mr. Parikh and found it very useful. You keep wondering about state of macromodelling in India and this is an excellent way to begin.

The opening chapter begins with the idea that how Indian economy has moved from a central planning model to a market driven one. This has led to changes in economic modelling as well.

The question came what is the role of planning in the changed economic environment? The answer is that India still has wide disparities in income, wealth, access to public goods , infrastructure shortages etc. So there is always a need for government action and plan to address these disparities and shortages. So there is a shift from setting industry targets to facilitating industry and general life by planning for providing public goods.

What is the strategy for the eleventh plan? There were fours factors:

  • Macroeconomic consistency: What growth rate is possible? What about Savings, investments, current account deficits, budget deficits etc?
  • Oil Price levels
  • Impact of global slowdown
  • Resources for inclusive growth – As social programs would be needed, would resources be available? What would be the impact on growth and deficits?

Then he discusses the various models in general and then the models used for eleventh plan. There are 5 models by various agencies:

  • Planning Commission
  • ISI Bangalore
  • IGIDR Mumbai
  • IEG Delhi
  • NCAER

How these 5 models look at the above four factors? Most predict growth rate in the range of 8.4% to 9.4% for the eleventh plan period. Read the report for more details.

Great insights from this planning commission document…

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2 Responses to “Macroeconomic Modelling for the 11th 5-year plan in India”

  1. Chaitanya Says:

    Hi,
    You may be wondering how to use rupee symbol since it is not available in your keyboard. Some amazing people have solved our problem for the time being. Please see:

    http://blog.foradian.com/

    Regards,
    Chaitanya

  2. rakesh Says:

    thank you for providing the link. I was wondering what is the current unemployment rate in India. Do you know?

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