The Entrepreneurial Revolution and Productivity in Indian Industry

Using annual data released in the 1990s, classifying units within Indian industry as being established in particular decades, those of the 1940s, 1950s, 1960s, 1970s, 1980 and 1990s, this article examines the resurgence of entrepreneurship in Indian industry, evaluated by the number of new units established in the 1980s and 1990s, and by the possibly positive level of investments made in these newer units. It also examines the relationship between age and productivity of units, measured using data envelopment analysis, finding the younger units to be more productive. An allied finding is that while there has been a progressive reduction in unit size over time, the relationship between unit size and productivity is negative suggesting that smaller units within Indian industry are more productive. The decentralization of Indian industry has had significant efficiency consequences and this predicates a very positive trajectory for the dynamics of industrial resurgence in India.