Chapter

What Constrains Indian Manufacturing?

Poonam Gupta, Rana Hasan and Utsav Kumar

in Emerging Giants

Published in print April 2010 | ISBN: 9780199575077
Published online September 2010 | e-ISBN: 9780191722141 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780199575077.003.0010
What Constrains Indian Manufacturing?

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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 chapter finds that the post-reform performance of the manufacturing sector is heterogeneous across industries. In particular, industries dependent on infrastructure or external finance, and labor-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 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.

Keywords: delicensing; external finance dependence; infrastructure intensity; labor intensity; manufacturing, reforms

Chapter.  12947 words.  Illustrated.

Subjects: Economic Development and Growth

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