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What Constrains Indian Manufacturing?

Author

Listed:
  • Poonam Gupta

    (Delhi School of Economics)

  • Rana Hasan

    (Asian Development Bank)

  • Utsav Kumar

    (The Conference Board)

Abstract

India has undertaken extensive reforms in its manufacturing sector in the last 2 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 3-digit level, and difference in differences estimates, this paper finds that the post reform performance of the manufacturing sector is heterogeneous across industries. In particular, industries that were dependent on infrastructure or external finance and were labor-intensive 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 sector's growth to accelerate further. They also emphasize the need to clearly identify and address the factors inhibiting the growth of labor-intensive industries.

Suggested Citation

  • Poonam Gupta & Rana Hasan & Utsav Kumar, 2008. "What Constrains Indian Manufacturing?," ADB Economics Working Paper Series 119, Asian Development Bank.
    • Handle: RePEc:ris:adbewp:0119
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    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy

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