Implications of Full Capacity Utilization of Manufacturing Sector in Indian Economy

This paper estimates the implications of full capacity utilization of manufacturing sector in Indian economy using the I-O framework. The study is carried out using the open Leontief model and also the semi-closed model endogenizing household demand. The working of the above models are illustrated using 1973-74 data. By fully utilizing the capacity of the manufacturing sector the output, income and employment increases by 22.86, 16.31 and 14.11 per cent respectively in open model and will increase by 38.68, 37.08 and 38.59 per cent in the semi-closed model. The output elasticity for the economy is 0.4048 and 0.6849 in open and semi-closed model respectively. The sectors 'mining and quarrying', 'banking and Insurance' and 'electricity' show high output elasticities.