What Constrains Indian Manufacturing?

41 Pages Posted: 22 Feb 2009

See all articles by Poonam Gupta

Poonam Gupta

Delhi School of Economics

Rana Hasan

Asian Development Bank; University of Maryland - Department of Economics

Utsav Kumar

Asian Development Bank

Date Written: February 20, 2008


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

Keywords: De-licensing, external finance dependence, infrastructure intensity, labour intensity, manufacturing, reforms

JEL Classification: G1, H5, L5, L6, O2

Suggested Citation

Gupta, Poonam and Hasan, Rana and Kumar, Utsav, What Constrains Indian Manufacturing? (February 20, 2008). Available at SSRN: https://ssrn.com/abstract=1347183 or http://dx.doi.org/10.2139/ssrn.1347183

Poonam Gupta (Contact Author)

Delhi School of Economics ( email )

Department of Economics
Delhi University
Delhi, Delhi 110007

Rana Hasan

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States
808-944-7590 (Phone)
808-944-7399 (Fax)

Utsav Kumar

Asian Development Bank ( email )

6 ADB Avenue
Central and West Asia Department
Mandaluyong City

HOME PAGE: http://works.bepress.com/kumarutsav/

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