Public investment is a central instrument through which India advances its long-term development objectives. Large-scale expenditures on infrastructure, energy systems, transport networks, urban services, and social programmes require a rigorous appraisal framework that can determine whether the present value of economic benefits from a project exceeds its economic cost. Such appraisal cannot rely solely on financial prices, because market prices incorporate taxes, subsidies, administered wage floors and other policy-induced distortions that cause them to diverge from the underlying opportunity costs of resources. Economic appraisal therefore requires translating financial magnitudes into economic values using parameters such as discount rates, conversion factors, shadow wage rates, and the social costs of carbon which measure climate damage valuations.<\/p>\n
The last comprehensive national assessment of these parameters was conducted by NITI Aayog in 2018, which provided estimates for use in public project appraisal. The study recommended a social discount rate of 8 percent for projects with horizons up to 50 years, with a lower rate of 6 percent for long-gestation infrastructure and environmental projects. It further suggested rates below 6 percent for projects extending beyond 100 years. It also estimated a 10 percent rate of return on capital, recommended as the hurdle rate for financial analysis, and identified an 8 percent foreign-exchange premium reflecting the gap between the economic value and the market price of foreign currency.<\/p>\n
Since the 2018 assessment, new rounds of official data and methodologies offer a stronger empirical foundation for revising the parameters used in economic appraisal. Since these are intended to reflect prevailing economic conditions, the parameters require periodic reassessments. The present study re-evaluates the parameter values for the social discount rate, standard conversion factor and shadow prices using recent datasets and new methodological frameworks, which build on the previous assessment by NITI Aayog conducted in 2018.<\/p>\n","protected":false},"featured_media":0,"parent":0,"template":"","format":"standard","meta":{"_acf_changed":false,"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"set","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}}},"tags":[],"member-author":[113,192],"project":[],"publication-type":[247],"publication-year":[231],"research-theme":[99],"class_list":["post-7686","publication","type-publication","status-publish","format-standard","hentry","member-author-e-somanathan","member-author-raavi-aggarwal","publication-type-report","publication-year-231","research-theme-others"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.isid.ac.in\/~cecfee\/wp-json\/wp\/v2\/publication\/7686","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.isid.ac.in\/~cecfee\/wp-json\/wp\/v2\/publication"}],"about":[{"href":"https:\/\/www.isid.ac.in\/~cecfee\/wp-json\/wp\/v2\/types\/publication"}],"version-history":[{"count":2,"href":"https:\/\/www.isid.ac.in\/~cecfee\/wp-json\/wp\/v2\/publication\/7686\/revisions"}],"predecessor-version":[{"id":7688,"href":"https:\/\/www.isid.ac.in\/~cecfee\/wp-json\/wp\/v2\/publication\/7686\/revisions\/7688"}],"wp:attachment":[{"href":"https:\/\/www.isid.ac.in\/~cecfee\/wp-json\/wp\/v2\/media?parent=7686"}],"wp:term":[{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.isid.ac.in\/~cecfee\/wp-json\/wp\/v2\/tags?post=7686"},{"taxonomy":"member-author","embeddable":true,"href":"https:\/\/www.isid.ac.in\/~cecfee\/wp-json\/wp\/v2\/member-author?post=7686"},{"taxonomy":"project","embeddable":true,"href":"https:\/\/www.isid.ac.in\/~cecfee\/wp-json\/wp\/v2\/project?post=7686"},{"taxonomy":"publication-type","embeddable":true,"href":"https:\/\/www.isid.ac.in\/~cecfee\/wp-json\/wp\/v2\/publication-type?post=7686"},{"taxonomy":"publication-year","embeddable":true,"href":"https:\/\/www.isid.ac.in\/~cecfee\/wp-json\/wp\/v2\/publication-year?post=7686"},{"taxonomy":"research-theme","embeddable":true,"href":"https:\/\/www.isid.ac.in\/~cecfee\/wp-json\/wp\/v2\/research-theme?post=7686"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}