Price and Income Elasticity of Indian Exports—The Role of Supply-Side Bottlenecks

This paper estimates the short-term and long-run price and income elasticity of Indianexports, and investigates the role of supply-side bottlenecks in shaping India's exportdemand relationship. We use disaggregated export volume data for 45 Indian industries overthe period 1990-2013, as well as industry-specific international relative prices, for estimation.Our results indicate that Indian exports are sensitive to international relative-pricecompetitiveness, world demand, and energy shortages. In addition, binding supply-sideconstraints (notably energy shortages) dampen price responsiveness in the short-term.