Economic growth across countries is associated with changes in the
composition of sectoral output, employment and consumption structure, known as “structural
change”. With high growth rates in the Indian economy in the post
liberalization period, structural change is expected to be rapid. However, the
share of the manufacturing sector has “crossed” over that of the agriculture
only very recently from the supply side and yet to cross over from the demand
side. Through a simple partial equilibrium model, this paper shows that such
slow structural change may be linked to a secular rise in the relative price of
agricultural goods in India.
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