“Industrial growth rate has lagged-behind in the overall growth of Gross-Domestic-product (GDP) in the post-reform period.” Give reasons. How far the recent changes in Industrial-policy are capable of increasing the industrial growth rate? (15 Marks)

India’s post-reform growth has been relatively service-led, while manufacturing has faced structural, infrastructural and policy constraints.

Reasons for lag

• Infrastructure and logistics bottlenecks, costly power and limited industrial land.
• Small, informal firms with low productivity and weak technology absorption.
• Skill deficits, complex compliance, labour-market segmentation and credit constraints.
• Import competition without deep domestic supply chains, plus weak research–industry links.

Assessment of policy changes

Make in India, insolvency reform, GST, FDI liberalisation, industrial corridors, easier compliance and infrastructure investment can lower transaction costs and improve scale. However, outcomes depend on stable taxation, competitive factor markets, speedy contracts, quality skilling and stronger MSME integration. Policy branding alone cannot substitute for state capacity.

Conclusion

Recent reforms are enabling conditions; sustained manufacturing growth requires coordinated implementation and export competitiveness.

Keywords: industrial policy; manufacturing; industrial growth.