India's Growth Pattern and Obstacles to Higher Growth

India’s growth performance has improved significantly over the past 20 years, but has been uneven across industries and states. While some service industries, notably in the information and communications technology sector, have become highly competitive in world markets – yielding considerable gains for employees and investors – manufacturing industries have lagged and improved their performance only recently. A divergence in performance has taken place, with firms in those states and sectors with the best institutions gaining, and those in the more tightly regulated states and sectors falling further behind. As a result, the competitive landscape is uneven across sectors and states and a high degree of concentration continues to prevail in different industries. While this is partly the result of the legacy of licensing, change has been politically difficult, making it harder for the manufacturing sector than for the service sector to expand. The need for further institutional refo...

2021

This book assesses the performance of Indian industries from the perspectives of trade, investment, policy, and development incentives. It evaluates the relevance and the macro-and microeconomic impact of industrial policy on growth in different sectors of industry. The book examines India's key policy initiatives and economic and institutional plans through many decades and examines their short and longterm effects on industrial environment and performance. It measures India's strategic policies and efforts to promote industrialization against similar initiatives in countries like Germany, Japan, South Korea, and Taiwan. The volume also contextualizes the performance of different sectors of industry such as automobiles, electronics and information technology, and pharmaceuticals, among others, within the larger framework of global economic scenario and competition. This book will be of great interest to researchers and students of economics, political economy, industrial development and policy, and South Asia studies. Nitya Nanda is Director of the Council for Social Development, a social science think tank based in New Delhi. His areas of interest include international trade, industrialization, development and environment issues. He has been a consultant for several UN organizations, including UNCTAD, UNESCAP, and UNDP, and the European Commission. He has also been a consultant for different government ministries and agencies in India and contributed to formulating policies. He has published many articles in journals and edited books, as well as pieces in magazines and newspapers. He has also authored and edited several volumes, including Expanding Frontiers of Global Trade Rules (2009), Hydro-Politics in GBM Basin (2015), and India's Resource Security (2018).

Mpra Paper, 2010

This paper briefly presents an analytical description of the twin processes of growth of output and change in its composition in the Indian economy since independence, by looking at the time-paths of the two dimensions simultaneously. It suggests that three turning points located respectively in the mid-1960s, 1980, and the mid-1990s separate the entire period after independence into four sequential phases of growth and structural change. This periodization of India's postindependence economic history points towards the need to go beyond relating the dynamics of the Indian economy to exclusively the degree to which the prevalent economic policy regime was interventionist or liberal in different periods.]

Growth of the Indian economy has been quite impressive during 2004-07. This paper chronicles the performance of the states in India during this high growth phase. The growth performance during 2000-03 is taken as the benchmark to compare and contrast the changing growth patterns across sectors in different states. Apart from sectoral growth, sectoral contributions to state output, variability of sectoral output and contribution of different sectors to overall growth in the spatial dimension have been studied. The results broadly indicate a decline in the importance of the service sector during the high growth phase and increased variability in output in the states. While maintaining the high growth rates of the primary and secondary sectors remains a challenge, increased variability of output raises serious concerns on the continuity of the high growth momentum in the future.

American Journal of Business, Economics and Management, 2016

The peninsular India is one of the fast growing economies in this world. The industrial sector of India is a Kaleidoscope, undergoing growth, structural change and policy renovations after independence. Against the backdrop, the present paper is an attempt to find out the growth spectrum of industrial sector of India in terms of output and employment. To assess the performance of these factors annual time series data have been drawn from the Annual Survey of Industries (ASI) published by the Central Statistical Organization, Government of India, for the period from 1973-74 to 2012-13. Further, necessary information has been collected from the Handbook of Statistics on Indian Economy, published by the Reserve Bank of India, and Economic Survey, published by Indian Ministry of Finance. To find out the effect of new economic policy in the growth of output and employment, the study period is classified into two folds, the pre-reform period covering the period from 1973-74 to 1990-91 and...

The Journal of International Trade & Economic Development, 2008

In this paper, we investigate the determinants of productivity in Indian manufacturing industries during the period 1988-2000. Using two-digit industry level data for the Indian states, we find evidence of imperfect interindustry and interstate labor mobility as well as misallocation of resources across industries and states. Trade liberalization increases productivity in all industries across all states, and productivity is higher in the less protected industries. These effects of protection and trade liberalization are more pronounced in states that have relatively more flexible labor markets. Similar effects are also found in the case of employment, capital stock and investment. Furthermore, labor market flexibility, independent of other policies, has a positive effect on productivity. Importantly, per capita state development expenditure seems to be the strongest and the most robust predictor of productivity, employment, capital stock and investment. Industrial delicensing increases both labor productivity and employment but only in the states with flexible labor market institutions. Even after controlling for delicensing, the analysis shows that trade liberalization has a productivity-enhancing effect. Finally, trade liberalization benefits most the export-oriented industries located in states with flexible labormarket institutions.

SSRN Electronic Journal, 2009

This study reveals that India's sectoral growth pattern differs from the conventional Petty-Clark's law in the sense that states with comparative disadvantage in agriculture appear to grow faster in manufacturing for survival and the services sector has been dominating even before sustaining the growth of the industrial sector in India. Therefore, India's growth strategies need to be based on its own specific characteristics and comparative advantage rather than simply following the 'flying geese' type of models. The global financial crisis has created an opportunity for India to move toward different ways of sustaining the services sector growth. Among other subsectors in services, retail 'service-led' growth, IT-Business Product Outsourcing, and trade in environmental goods and services (EGS) provide avenues to achieve the objective of sustained inclusive growth. Nevertheless, in order to provide sustained employment to several million people, India needs to maintain at least the existing momentum in labour intensive manufacturing, which is also causally linked with the services sector.

Journal of Development Economics, 1988

A decade ago, a vigorous debate over the causes of 'stagnation' in Indian industrial growth since the mid-sixties emerged. Many of the important articles were published in the Economic and Political Weekly, a unique Indian periodical combining current affairs journalism with scholarly, refereed papers. Every conceivable position on the causes of industrial growth decline seems to have been staked out. On the demand side, it was argued that slow growth in the agricultural sector was translated into slow growth in demand for industrial goods; that increases in inequality in the urban sector dampened growth of demand for basic consumer manufactures; that terms of trade worsened against the large agricultural sector as a whole, again reducing demand. On the supply side, it was argued that India's complex system of industrial policies served to restrict entry and exit, reduce domestic and international competition, and in general retard the development of entrepreneurship. Direct and indirect effects of a slowdown in public investment were said to have weakened the entire industrial sector. Casual evidence of a factor productivity growth slowdown was cited. And the terms of trade were said to have changed in faoor of agriculture, causing resources to be shifted away from the industrial sector. Some authors even argued that the industrial slowdown was only a figment of the data: India revised its system of national accounts at just the time the slowdown was said to have begun. At last in Prof. Isher Ahluwalia's book we have a treatment of this issue which is theoretically and empirically comprehensive. She demonstrates a rare ability to combine insightful economic detective work with sound theory and rigorous hypothesis testing. Her book has much to offer not only to those interested in Indian economic development, but also to those who would examine industrial development in other LDCs. Professor Ahluwalia shows that the decline in manufacturing growth after 1965-66 was all too real -and statistically significant. After a careful development of the alternative data, some constructed for the purposes of the study, she uses econometric techniques to determine that a slowdown in aggregate industrial growth from about 7% in the 19561965 period to about 4% in the 19661981 period was statistically robust. The only potential problem rests with whether the industrial output of the informal sector, for which reliable data is unavailable, has

Industrial development plays a momentous role in all walks of development. The empirical investigations of world famous works pursued by Simon Kuznets(1966) Chennery(1980), Hoffman(1958), Murray & Bryce(1960) and Kaldor(1978) found that there is a positive and significant association between industrial development and overall development of a nation. In this paper an attempt is made to assess the various dimensions of industrial development of Tamil Nadu, India. To examine the performance of the industrial economy of Tamil Nadu, statistics have been collected from Annual Survey of Industries, published by Central Statistical Organization, Government of India. The variables administered in this work to evaluate the performance of agro based and non agro based manufacturing industries of Tamil Nadu include number of factories, productive capital, employment, value of output and value added. This study covers the period of three decades form 1980-81 to 2010-11, so as to understand the effects of the new economic policy. Further, the entire study period has been classified into two folds as pre reform period (1980-81 to 1990-91) and post reform period as (1991-92 to 2010-11). Collected statistics are deflated using wholesale price index to overcome the price fluctuation. The result obtained using annual compound growth rate reveals that almost all the variables express the same level of growth in both agro and non-agro related industries. But, owing to extraordinary performance of chemical based industries the value added of non- agro related industries reveal a dramatic growth. Mention should be made that the growth of employment has shown a negative sign during the reform period. Hence, it is suggested that the policy makers should frame the effective and suitable policy considering the employment generation. Such kind of strategies will give a new life not only to India but also all the developing countries.