Private enterprise growth and human capital productivity in India

This article examines patterns of growth in private firms and private equity investment and in the decline in state-owned firms and equity capital within the corporate sector in Indian industry over a 25-year period, 1973-1974 to 1997-1998, with some additional analysis extended to 2001-2002, to assess whether a transformation in ownership has taken place, whether the boundaries of the state as a participant in industry have significantly declined and the boundaries of private enterprise enhanced. The data cover the entire industrial population of India. The boundaries of the state as an industrial participant have shrunk significantly as a result of the growth of private entrepreneurship in India, especially in industries where agents are engaged in technological entrepreneurship. The numbers of private companies established in India have grown and the volume of equity capital being invested has risen substantially. Associated with this relative growth of private firms and shrinking of government ownership is a significant increase in human capital productivity across all ownership categories of Indian industry.