Productivity growth in Indian manufacturing: Policy implications from an econometric analysis

This paper evaluates the impact of various policy reforms, including the economic reforms of the 1990s, on India's manufacturing sector. Covering the priority sectors relevant to the government's 'Make in India' initiative, the paper analyses the productivity of registered manufacturing units from 1974-75 to 2012-13. It offers empirical evidence on the growth of productivity in the organised manufacturing sector through an inter-temporal and inter-industry comparison of total factor productivity (TFP) following a parametric approach. From a policy perspective, this analysis indicates the growing disconnect between economic growth and employment generation in the country's manufacturing sector. It makes the case that the poor growth of the Indian manufacturing sector in the last four decades has been a hindrance to employment generation. The paper closes by identifying the industries that carry potential for employment generation along with output growth.


Preeti Kapuria

Nilanjan Ghosh