Estimation of economic discount rate for project appraisal in India

Abstract

This study examines several possible approaches for estimation of economic discount rates (EDRs). The main theoretical and methodological problems for such estimation are analysed together with the cursory treatment of time-series data in previous studies. Apart from the availability of pertinent data, the objective estimate of EDR depends on formulation of appropriate econometric models and their statistical validation. This study indicates that a value of 10.2% (real) would be appropriate for project appraisal in India. © 1997 Taylor & Francis Group, LLC.