What is new about India’s economic growth? An industry level productivity perspective

Abstract

Purpose The dynamics of economic growth in India continues to engage economists and still remains much debated. The trends and patterns of growth observed in India have seen acceleration in growth in Indian economy in the period following macroeconomic reforms and policy changes in investment and trade regimes. However, when and how did India transform itself from Hindu rate of growth to the present growth regime continues to be debated. Design/methodology/approach Using INDIA KLEMS data set, this study provides a distinctive perspective on India’s economic growth. A unique data set comprising 27 sectors of Indian economy at a disaggregate industry level for a period of 30 years, beginning 1980s, attempts to understand the dynamics of India’s growth from the contribution of industries that comprise the Indian economy. Findings This productivity data set offers a new way of analyzing the dynamics of growth including the sources of growth. The growth empirics allow evaluation of the relative significance of total factor productivity growth vis-a-vis input accumulation in accounting for output growth. In addition, the authors were able to document the industry contributions to aggregate growth. In this way, they were able to analyze the importance of the constituent industries within the different sectors of the economy − agriculture, manufacturing, construction and market, as well as non-market services in accounting for the observed growth in India. In conclusion, the industry perspective offers a new and analytical way of discerning new aspects of India’s march to higher growth regimes in post-1990s era. Originality/value A unique data set comprising 27 sectors of Indian economy at a disaggregate industry level for a period of 30 years, beginning 1980s, attempts to understand the dynamics of India’s growth from the contribution of industries that comprise the Indian economy.