Value Added in Industry Infrastructure and Development Banking: An Optimal Control Formulation

In this paper, we report estimated single equation models explaining the value added in the industries in India as well as fifteen states. The choice of the states has been dictated mainly by the relative ease of obtaining data. An effort is made to assess the relative effort with respect to development banking and infrastructure, and to draw conclusions about where either of these instruments need to be pushed to maximise returns vis-a-vis incremental value added. To this end, optimal control technique has been used. Thus, an illustration of the use of this relatively new technique, for determining the allocation of funds is another important aspect of this paper.