Economic Reforms and Manufacturing Sector Growth

Manufacturing output grew 7%–8% annually since 1991, with a marked improvement in the variety and quality of goods produced. Yet, its share in gross domestic product has practically stagnated, with a sharp rise in import intensity. Liberal (or market-friendly) policies were expected to boost labour intensive exports and industrial growth. Why did the manufacturing sector fail to realise these goals? It is widely believed that India needs to “complete” the reform agenda to realise its potential. Critically examining such a view, it is suggested that the long-term constraints on industrialisation perhaps lie in poor agricultural productivity and inadequate public infrastructure. Further, there is a need to re-imagine the role of the development state to realise goals, as the experience of all successful industrialising nations suggests.