Gauging Effects of Hypothetical Extraction Method on Transport Linkages in India

Transport infrastructure is imperative for sectoral growth and economic progress. To gauge the impact of reduced contributions by the Railway and Other Transport sectors on other sectors in India, we use the Hypothetical Extraction (HE) based methodology to analyse the impact of such changes on outcomes of different sectors. Five Input-Output Transaction Tables (IOTT), between the years 1993-2014, are aggregated into 22 sectors. Methodologically, sector pair-wise correlations and sectoral groupings are identified in the transport sector. Induced elimination of Railway and Other Transport sector contributions are used to capture sectoral dependencies. Changing patterns in ‘Key’ sector compositions are further identified. Manufacturing, Mining and Quarrying, Construction, Storage and Warehousing and Electricity appear significantly correlated with Transport. Extraction causes sizeable output loss (around 60 perent) for the Manufacturing sector. ‘Self-extraction’ results in declining loss of output for transport sectors, whereas, Electricity and Storage and Warehousing remain ‘Key sectors’ in the post-extraction economy. An important implication emerging from our analysis is that dynamic relational dependencies across other sectors must be considered for future investments in transport infrastructure.