Employment

Investment
Gross Domestic Product
Initiative of Industrial Reform
Several initiatives were taken under the Industrial Policy
1991, which include:

1. Plunging of Indian economy in to the arena of ‘Globalization’ and to give it

a new thrust on market.
2. Cutting back of Public Investment as it is believed to have ‘crowded out’
private investment.
3. Undermine the protective and promotional measures for small-scale
industries that are claimed to have bred inefficiency and failed to expand
labour-intensive manufactures.
4. Encouraging ‘Disinvestment’ as it will help to reduce government’s fiscal
deficit.
 Industrial Trends
Phases :

1. 1992 - 96 : The first phase came up with booming output and

investment in the anticipation of a virtuous cycle of faster growth and
exports. However, with the expectations of a boost in demand not being
realised, industrial growth decelerated.

2. 1997 - 2003 : After the initial boom until 1996,there was a nine year
period of deceleration, when the output growth was buffeted by many
shocks, such as the Asian financial crisis.
3. 2003 - 2008 : This phases was led by outsourcing services exports,
but manufacturing growth matched the boom with a 10% annual
growth rate, made possible by a steep rise in domestic savings,
investment, and capital inflows, boosting the capital formation.

4. 2008 - till now : The growth rate recovered after the financial crisis
in 2008-09 but at a slower rate of 7.3% per year in the following four
years until 2011-12, and decelerated rapidly thereafter. However, the
industrial growth scenario after 2014 remains hazy on account of
unrealiable data. The recent data shows Industrial production grew at
a nine-month high of 4.3% , mainly on account of robust performance
of mining and power sectors coupled with higher capital goods
output.
 Outcome of the Reform on :
Employment

Reformists view
1. Lead to increase in competition and efficiency through better allocation of
resources.
2. Greater labour and product market flexibility.
3. Shift towards labour intensive technique and commodity.
4. Rise on employment potential and job availability.

Protagonists view
1. Shift towards capital intensive technique.
2. Restricting employment expansion.
3. Casualization of workforce.
Investment
Reformists view
1.India’s openness become comparable to its Asian peers.
2.Reduction in tariff attracts investors.
3. Numerous bilateral trade and investment treaties were signed.
4.promotion of FDI and policies and its technology.

Protagonists view
1.FDI was restricted especially in retail sector.
2.Due to lack of infrastructure , invertor was not interested.
3.Chian and other Asian countries are doing much better.
4.Bilateral trade and investment treaties were not successful enough.
Gross Domestic Production (GDP)

The size of the economy can often give the first impression
of the might of a country. The low annual growth rate of the
economy of India before 1980, which stagnated around 3.5%
from 1950s to 1980s, while per capita income averaged 1.3%
.India’s GDP stood at Rs 5,86,212 crore in 1991. About 25
years later, it stands at Rs 1,35,76,086 crore, up 2216 percent.
In dollar terms, India’s GDP crossed the $2 trillion mark in
2015-16. Currently, the country is ranked sixth in the world
in terms of nominal GDP. India is tipped to be the second
largest economy in the world by 2050.
 Why did the reform fail to deliver?

The end of the licence raj and the opening up of the economy to private
and foreign capital has been a success story. But there are also several areas
where our hopes have been belied.

1. Reforms remained incomplete due to labour market rigidities.

2. Infrastructure bottlenecks.
3. Absence of suitable policy for exports.
4. Investments restrictions.
5. Poor agriculture performance.
6. Ignorance of demand factors.
 What should be done now?
There is serious need to take some steps to improve the working of the
Industrial Policy, 1991, such as:

1. Role of state support for industrialization should be revisited.

2. Rise in agriculture productivity should be promoted.
3. Turning to exports for sustaining domestic growth.
4. Reinventing industrial policy.
5. Improvement in infrastructure.
6. Reconfiguration for capital goods development.
7. Capital and technology import should be accompanied with
commitment for research and development.
BIBLIOGRAPHY
R NAGARAJ[2017,jan 14]; ‘’economic reforms and manufacturing sector growth’’,
Economic and political weekly, volume no.2.
www.ibef.org.
www.livemint.com.
www.yourarticlelibrary.com.

THANK YOU!
JYOTI PRAKASH
SANJANA VERMA
KISHIKA BANSAL