Economic Implications of Natural Gas Allocation on the Indian Economy
Alok Aditya and Krishna Raj
Abstract
This paper analyses the economic implications of natural gas allocation on the Indian economy. It explores the optimal priority order for natural gas allocations based on its economic linkages with other sectors. Using input-output modelling, the study assesses the quantitative economic impacts of natural gas on output, income, and employment in India. The backward linkage analysis revealed that the natural gas sector’s high import dependency generates ` 0.357 demand from other sectors per additional rupee of output. Despite lower backward linkage scores compared to crude petroleum and coal, the natural gas sector exhibited strong forward linkages, influencing ` 1.957 across various sectors. The investment in the natural gas sector exhibited a production-induced effect of 1.357, indicating a positive impact on economy-wide output. Moreover, changes in final demand for natural gas had a notable effect on household income and employment, further showcasing the sector’s significant contributions to the overall economy.