Industrial Policy
tSpecial
articles
and Industrial Policy Which 1980: since
Performance Now? Way
Since 1980-81, manufacturingsector output has grown at 7 per cent per year, with economic reforms making little difference to the trend in the 1990s. But growth has decelerated over the last seven years, after peaking in 1995-96. Why is this so? The reforms have narrowlyfocused on policy-induced restrictions on supply, ignoring the demand constraint due to the cut in public infrastructureinvestmentsince the late 1980s and indifferentagricultural performance in the 1990s. These issues have to be squarely addressed to revive industrial growth, and to reap the benefits of the investmentboom in organised manufacturingin the last decade.
R NAGARAJ
sector currentlyaccounts for about India's manufacturing 17 per cent of real (measured)GDP, 12 per cent of total and workforce, close to 80 percent of merchandise exports. Overthe pasthalf century,this sectorhas grownat nearly6 per times the growthrate of cent per year;at over one-and-a-half a domesticoutput- representing majorbreakfromthe colonial past. rate Theannual trend gross growth of totalmanufacturing value added(output,for short,hereafter) duringthe last two decades (1980-2000) is close to 7 per cent. While this representsa turnaround comparedwith the preceding period of 'relative stagnation'(1965-1980), the record is modest in contrastto China's(official)double-digit growthduringthisperiod,as also Asian economies (Table 1). most other industrialising
Evolution Policysince 1980 of
Industrial upturn in the 1980s: Around 1980, the initial year of
our studyperiod,therewas considerablegloom aboutthe immediate prospects for industrial growth, despite having a of surplus food and foreignexchangestocks for a few yearsin on the late 1970s - widely regardedas long-termconstraints India'seconomicgrowth.For a varietyof reasons,lack of industrial demand,especially for investmentgoods, was widely acceptedto be the
articles
and Industrial Policy Which 1980: since
Performance Now? Way
Since 1980-81, manufacturingsector output has grown at 7 per cent per year, with economic reforms making little difference to the trend in the 1990s. But growth has decelerated over the last seven years, after peaking in 1995-96. Why is this so? The reforms have narrowlyfocused on policy-induced restrictions on supply, ignoring the demand constraint due to the cut in public infrastructureinvestmentsince the late 1980s and indifferentagricultural performance in the 1990s. These issues have to be squarely addressed to revive industrial growth, and to reap the benefits of the investmentboom in organised manufacturingin the last decade.
R NAGARAJ
sector currentlyaccounts for about India's manufacturing 17 per cent of real (measured)GDP, 12 per cent of total and workforce, close to 80 percent of merchandise exports. Overthe pasthalf century,this sectorhas grownat nearly6 per times the growthrate of cent per year;at over one-and-a-half a domesticoutput- representing majorbreakfromthe colonial past. rate Theannual trend gross growth of totalmanufacturing value added(output,for short,hereafter) duringthe last two decades (1980-2000) is close to 7 per cent. While this representsa turnaround comparedwith the preceding period of 'relative stagnation'(1965-1980), the record is modest in contrastto China's(official)double-digit growthduringthisperiod,as also Asian economies (Table 1). most other industrialising
Evolution Policysince 1980 of
Industrial upturn in the 1980s: Around 1980, the initial year of
our studyperiod,therewas considerablegloom aboutthe immediate prospects for industrial growth, despite having a of surplus food and foreignexchangestocks for a few yearsin on the late 1970s - widely regardedas long-termconstraints India'seconomicgrowth.For a varietyof reasons,lack of industrial demand,especially for investmentgoods, was widely acceptedto be the