Economic Liberalisation, Structural Change and Productivity Growth in Indian Organised Manufacturing Sector, 1991-2016

The present study examines the nature of structural change and productivity dynamics in the organised manufacturing of India since economic liberalisation in the early 1990s. We find significant changes in Indian manufacturing as the specialisation pattern moved towards technology-intensive segments with considerable improvement in output, productivity, wages, and capital intensity. However, a corresponding growth in employment is not observed across many industries. The decomposition of labour productivity at the sectoral level reveals the overwhelming presence of within-sectoral technological change component of growth across different industries. However, the detailed plant-level data show evidence of positive structural change, in terms of static and dynamic shifts, among the medium technology-intensive sectors during the 2000s. The findings point out the need to have comprehensive and strategic policy interventions to address the structural rigidities and institutional bottlenecks in the manufacturing sector.