Industrial Growth In India: stagnation since the mid - sixties

A thorough examination of the available empirical evidence enables the author to identify four principal factors responsible for this stagnation the slowdown in public investment after the mid-sixties with its particular impact on infrastructural investment; poor management of the infrastructure sectors; slow growth of agricultural incomes and its effect in limiting the demand for industrial goods; the industrial policy framework (including both domestic industrial policies as well as trade policies) and its effect in creating a high cost industrial structure within the economy.

A commonly advanced explanation of the cause of industrial stagnation, namely that income distribution has worsened over time, is found to have no empirical basis. The role of import substitution in industrial growth is also analysed.

The importance of the book arises from its finding that by far the most important factor holding back the growth of the industrial sector was, ironically, the policy framework. Notwithstanding the hopes and objectives set out in the Industrial Policy Resolution of 1948. 1956 and 1973, and in the Industrial Policy Statement of 1980, the industrial policy framework has in effect stifled industrial growth. An attempt is made to identify the policy constraints to growth by providing a sketch of the industrial policy regime and then spelling out its economic consequences.