Estimation of a Social Rate of Interest for India

Erhun Kula

Journal of Agricultural Economics, 2004, vol. 55, issue 1, 91-99

Abstract: This paper estimates a social discount rate in India for the purpose of economic evaluation of investment projects, such as those aimed at improving the nation's agricultural performance. The component parameters of this rate are: the growth rate of per capita consumption in real terms, the elasticity of the marginal utility of consumption and the mortality‐based discount rate. Based upon time series data, the overall figure turns out to be 5.2 percent. This, it is contended, is reasonable and may be used in cost benefit analysis in that country.

Date: 2004
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