Some Issues Related to the Creation and Use of Import Matrices for the Indian Economy

In this paper, we have developed a methodology for creation of an import matrix. This generated matrix has then been compared to the published import matrix for 1991-92, for the Indian economy. We find that there is a wide discrepancy between the two. This raises questions regarding the use of a generated import matrix, especially in a liberalizing atmosphere. We have also found the actual and the potential linkages for 1973-74, 1983-84 and 1991-92. Contrary in the expectations, we find that these two are highly and positively correlated. The reasons for this have been examined. We have also looked into the measures of import substitution and the net foreign exchange savings.