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Manufacturing Growth and Liberalisation in India (1960-1999): A Demand Side Analysis


  • Rahul Shastri

    (National Akademi of Development)


The trend in manufacturing has not shifted post-91. Liberalisation shares in the high trend phase in manufacturing, that was ushered in after 1981, which continued even after 1991. Liberalisation however, seems to have changed the structure of demand responses of manufacturing output. In contrast to pre-liberalisation years, after 1991, manufacturing growth seems to have become highly sensitive to growth in personal consumption expenditure. After 1991, a one percentage point increase in personal consumption expenditure seems to change manufacturing growth by nearly 2 percentage points! Liberalisation also seems to have increased the responsiveness of manufacturing growth to fluctuations in growth of gross capital formation and exports. However, the increase in responsiveness to changes in export growth is not statistically significant.

Suggested Citation

  • Rahul Shastri, 2005. "Manufacturing Growth and Liberalisation in India (1960-1999): A Demand Side Analysis," Industrial Organization 0504018, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpio:0504018
    Note: Type of Document - pdf; pages: 7

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    More about this item


    Liberalisation; Indian Manufacturing; Demand-side analysis; personal consumption; exports; Keynesian Economics;

    JEL classification:

    • A - General Economics and Teaching
    • E - Macroeconomics and Monetary Economics
    • L - Industrial Organization
    • N - Economic History

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