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The Post-reform Performance of the Manufacturing Sector in India


  • Kaliappa Kalirajan

    (Foundation for Advanced Studies on International Development National Graduate Institute for Policy Studies (FASID/GRIPS) 2-2, Wakamatsucho Shinjuku-Ku Tokyo 162-8677 Japan,)

  • Shashanka Bhide

    (National Council of Applied Economic Research 11 I.P. Estate New Delhi 110002 India, and Institute for Social and Economic Change Nagarabhavi Bangalore 560072 India)


Manufacturing played an important part in sustaining India's economic growth in the 1970s and 1980s. The economic reforms of the early 1990s did not lead to sustained growth of the manufacturing sector. After an acceleration in the mid-1990s, growth slowed in the decade's second half. The analysis presented in this paper reveals that manufacturing-sector growth in the postreform period is "input driven" rather than "efficiency driven," with significant levels of technical inefficiency. The paper advocates policies to improve production efficiency by encouraging investment in research and development, technical training for workers, and technology-aided managerial processes. Copyright (c) 2005 The Earth Institute at Columbia University and Massachusetts Institute of Technology.

Suggested Citation

  • Kaliappa Kalirajan & Shashanka Bhide, 2004. "The Post-reform Performance of the Manufacturing Sector in India," Asian Economic Papers, MIT Press, vol. 3(2), pages 126-157.
  • Handle: RePEc:tpr:asiaec:v:3:y:2004:i:2:p:126-157

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    References listed on IDEAS

    1. David E. Bloom & David Canning & Jaypee Sevilla, 2001. "The Effect of Health on Economic Growth: Theory and Evidence," NBER Working Papers 8587, National Bureau of Economic Research, Inc.
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    1. repec:wsi:serxxx:v:56:y:2011:i:03:n:s0217590811004316 is not listed on IDEAS
    2. Mazumdar, Mainak & Rajeev, Meenakshi & Ray, Subhash C., 2012. "Sources of Heterogeneity in the Efficiency of Indian Pharmaceutical Firms," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 47(2), pages 191-221.
    3. K.J Joseph & Vinoj Abraham, 2007. "Information technology and productivity: Evidence from India's manufacturing sector," Centre for Development Studies, Trivendrum Working Papers 389, Centre for Development Studies, Trivendrum, India.
    4. K.R. Shanmugam & Vidhya Soundararajan, 2008. "Sources of Output Growth in Indian Agriculture during the Post-Reform Period," Development Economics Working Papers 22515, East Asian Bureau of Economic Research.
    5. S K Mishra, 2007. "Globalization and Structural Changes in the Indian Industrial Sector: An Analysis of Production Functions," The IUP Journal of Managerial Economics, IUP Publications, vol. 0(4), pages 56-81, November.
    6. Kaliappa Kalirajan & Kanhaiya Singh, 2013. "Understanding Sectoral Economic Growth in India: The Potential for Services," Institutions and Economies (formerly known as International Journal of Institutions and Economies), Faculty of Economics and Administration, University of Malaya, vol. 5(1), pages 91-112, April.
    7. Shishir Saxena, 2011. "Technology and spillovers: evidence from Indian manufacturing microdata," Applied Economics, Taylor & Francis Journals, vol. 43(10), pages 1271-1287.
    8. Banerjee, Rajabrata & Roy, Saikat Sinha, 2014. "Human capital, technological progress and trade: What explains India's long run growth?," Journal of Asian Economics, Elsevier, vol. 30(C), pages 15-31.
    9. Ghosh, Saibal, 2013. "Do economic reforms matter for manufacturing productivity? Evidence from the Indian experience," Economic Modelling, Elsevier, vol. 31(C), pages 723-733.
    10. Bhaumik, Sumon K. & Kumbhakar, Subal C., 2008. "Impact of Reforms on Plant-Level Productivity and Technical Efficiency: Evidence from the Indian Manufacturing Sector," IZA Discussion Papers 3347, Institute for the Study of Labor (IZA).
    11. Bhaumik, Sumon Kumar & Kumbhakar, Subal C., 2010. "Is the post-reform growth of the Indian manufacturing sector efficiency driven? Empirical evidence from plant-level data," Journal of Asian Economics, Elsevier, vol. 21(2), pages 219-232, April.
    12. Rajesh Natarajan & Malathy Duraisamy, 2008. "Efficiency and productivity in the Indian unorganized manufacturing sector: did reforms matter?," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 55(4), pages 373-399, December.

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