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What Constrains Indian Manufacturing?

  • Poonam Gupta

    (Indian Council for Research on International Economic Relations)

  • Rana Hasan
  • Utsav Kumar

India has undertaken extensive reforms in its manufacturing sector in the last two decades. However, an acceleration of growth in manufacturing, and a concomitant increase in employment, has eluded India. What might be holding the sector back? Using Annual Survey of Industries data at the three-digit level and difference in estimates this paper finds that the post-reform performance of the manufacturing sector is heterogeneous across industries. In particular, industries dependent on infrastructure or external finance, and labour-intensive industries have not been able to reap the maximum benefits of reforms. The results point to the importance of infrastructure development and financial sector development for the manufacturing sectors growth to accelerate further. They also emphasize the need to clearly identify and address the factors inhibiting the growth of labour-intensive industries.

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File URL: http://www.eaber.org/node/22162
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Paper provided by East Asian Bureau of Economic Research in its series Macroeconomics Working Papers with number 22162.

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Date of creation: Jan 2008
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Handle: RePEc:eab:macroe:22162
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  1. Mitra, Devashish & Ural, Beyza P., 2007. "Indian manufacturing : a slow sector in a rapidly growing economy," Policy Research Working Paper Series 4233, The World Bank.
  2. Rana Hasan & Devashish Mitra & K.V. Ramaswamy, 2007. "Trade Reforms, Labor Regulations, and Labor-Demand Elasticities: Empirical Evidence from India," The Review of Economics and Statistics, MIT Press, vol. 89(3), pages 466-481, August.
  3. Poonam Gupta & James P. F. Gordon, 2004. "Understanding India’s Services Revolution," IMF Working Papers 04/171, International Monetary Fund.
  4. Arvind Subramanian & Raghuram Rajan & Ioannis Tokatlidis & Kalpana Kochhar & Utsav Kumar, 2006. "India's Pattern of Development; What Happened, What Follows?," IMF Working Papers 06/22, International Monetary Fund.
  5. Prachi Mishra & Utsav Kumar, 2005. "Trade Liberalization and Wage Inequality; Evidence From India," IMF Working Papers 05/20, International Monetary Fund.
  6. Étienne Gilbert, 1987. "J. J. Ahluvalia, Industrial Growth in India : Stagnation since the Mid-Sixties," Revue Tiers Monde, Programme National Persée, vol. 28(112), pages 968-968.
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