Excess Capacities in Indian Industries-Supply or Demand Determined

Supply or Demand Determined?
P V Srinivasan In this study, we try to identify for different industries whether the presence of excess capacities is due to a demand or a supply constraint. Results based on our analysis indicate that most of the industries that we consider are demand constrained, although the estimated slack/shortage has not been uniform over the years. It is, however, possible that the lack of demand could have been generated by some supply constraints such as inadequate industrial infrastructure.