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Ashok Kotwal
GST Explainer: Introduction
Posted on: 16 Oct 2017
Seventeen years after its framework was formed, India’s biggest tax reform – the goods and ... read on »
Introducing a new feature: ‘Explainers’
Posted on: 16 Oct 2017
Our day-to-day lives are tossed around due to economic changes, resulting sometimes from g ... read on »
On demonetisation
Posted on: 23 Dec 2016
On the evening of 8 November, the Prime Minister announced on national television that Rs. ... read on »
Introduction to e-Symposium: The GDP conundrum
Posted on: 16 Nov 2016
Ever since India’s Central Statistical Organisation came out with the new GDP series with ... read on »

Tag: manufacturing

The lad(y) doth protest too much, methinks
Pronab Sen
Posted on: 13 Oct 2017

Former Finance Minister Yashwant Sinha has trashed the present government’s track record on economic management. In a recent article, economist Surjit Bhalla refuted Mr. Sinha’s claims with a point-by-point take-down. In this article, Dr. Pronab Sen responds to Dr. Bhalla’s critique.
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Draft social security code: Will it help informal workers?
Sharmila Kantha
Posted on: 21 Sep 2017
Topics:   Jobs


Labour law reform is considered as a key requirement for creation of new jobs as well as greater formalisation of existing jobs in India. In March this year, the Ministry of Labour and Employment brought out the draft social security code to amalgamate several Central labour laws and extend employment security to all workers. In this article, Sharmila Kantha discusses the positive features and practical aspects of the legislation.
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What does the new IIP series tell us about the state of manufacturing in India?
Radhika Pandey , Amey Sapre , Pramod Sinha
Posted on: 02 Aug 2017
Topics:   Economic Growth


In May 2017, the Central Statistics Office released the new series of the Index of Industrial Production with 2011-12 as the base year, after a comprehensive revision of computation methods. The series almost entirely reverses the performance picture of Indian manufacturing, showing sharp upward revisions in the growth of activity. This column finds that the new index is likely to show inflated growth during times of falling inflation. Thus, deciphering the actual change in production continues to be difficult.
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Impact of disinvestment policy on public sector enterprises in India
Ritika Jain
Posted on: 12 Jun 2017
Topics:   Political Economy


To address operational inefficiencies in PSEs without comprising on their social objectives, disinvestment policy is often used. However, there are concerns regarding the extent of impact on firm performance since disinvestment may involve transfer of ownership but not control. Analysing data from 1991-2010 on all manufacturing PSEs owned by the central government, this column shows that the average annual efficiency score of disinvested enterprises rose by almost 20%.
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Is the structure of Indian manufacturing geared towards job creation?
Sharmila Kantha
Posted on: 05 Dec 2016
Topics:   Jobs


Government of India has envisaged adding 100 million jobs in manufacturing by 2022. This column finds that the structure of the country’s manufacturing sector is misaligned with the objective of job creation. Subsectors that have low potential to generate jobs dominate the manufacturing profile. To generate jobs, more employment-intensive subsectors should be promoted.
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How do electricity shortages affect industry in India?
Hunt Allcott , Allan Collard-Wexler , Stephen D O'Connell
Posted on: 25 Nov 2016
Topics:   Infrastructure


Poor electricity supply is widely recognised as a key impediment to firm growth and productivity. This column finds that average reported level of electricity shortages in India reduces annual plant revenues and producer surplus of the average manufacturing plant by 5-10%. While productivity losses are smaller, shortages distort plant size distribution due to significant economies of scale in generator costs.
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GDP conundrum: Some areas of concern around growth overestimation in Indian manufacturing
Amey Sapre
Posted on: 18 Nov 2016
Topics:   Economic Growth


Based on the new GDP series, large upward revisions in manufacturing growth rates were made – from 1.1% to 6.2% in 2012-13, and from -0.7% to 5.29% in 2013 – 14 that were not reflective of the actual performance of the sector during the period. In this article, Amey Sapre, doctoral student in Economics at IIT Kanpur, analyses some of the methodological issues in measuring growth in the manufacturing sector.

This is the third of a four-part series.

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The hidden productivity benefits of energy-saving technology: Evidence from LEDs in Indian factories
Achyuta Adhvaryu , Namrata Kala , Anant Nyshadham
Posted on: 03 Oct 2016

Energy-efficient technologies are an increasingly relevant policy priority, given growing consensus on the need to tackle climate change. This column examines the productivity benefits of adopting one such technology – LED lighting – for manufacturing firms in India. It finds that improved productivity resulting from LED lighting’s lower heat emissions makes adopting such technology far less costly than previous anticipated, particularly for labour-intensive firms in hot climates.
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Panel Discussion: Two years of Modi government
Pranab Bardhan , Parikshit Ghosh , Pratap Bhanu Mehta , Mihir Sharma
Posted on: 29 Aug 2016
Topics:   Political Economy


In  a panel discussion organised to mark the 4th anniversary of Ideas for India, I4I Editor Parikshit Ghosh (Delhi School of Economics) moderates a discussion on ‘Two years of Modi government’ among Pranab Bardhan (University of California, Berkeley), Mihir Sharma (Bloomberg View) and Pratap Bhanu Mehta (Centre for Policy Research), encompassing issues related to policy and governance; corruption; manufacturing; social sector; and social and cultural issues.
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Could emerging economies change the rules of the global labour standards game?
Kuntala Bandyopadhyay
Posted on: 24 Aug 2016
Topics:   Jobs , Trade


In an increasingly global marketplace, the ramping up of trade has drastically altered the way goods are manufactured and sold. In this article, Kuntala Bandyopadhyay, research associate at ICRIER, discusses four processes and vectors through which emerging economies can shape global labour standards in a way that protects both their workers and the environment.
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Justice delayed is development denied: The effect of slow courts on economic outcomes in India
Amrit Amirapu
Posted on: 22 Aug 2016
Topics:   Economic Growth


India´s formal judicial system is infamously slow, even for a developing country. What is less well established is whether this matters to economic outcomes. This column uses state-level variation in the speed of courts coupled with the fact that certain industries rely on contract enforcement more than others: to show that slow courts in India have a substantial negative impact on output and employment growth in the formal manufacturing sector.
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A comparison of automobile industries in India and China
Smita Miglani , Saon Ray
Posted on: 05 Aug 2016
Topics:   Trade , Global Economy


The automobile sector in both India and China developed due to waves of investment in these countries since the late 1980s. This column discusses how India’s automobile sector has grown differently from that of other developing countries, especially China. In contrast to China, India has relied much more heavily on domestically-grown lead firms and has hence, benefitted at a slower pace from global best practices.
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Land and financial misallocation in India
Gilles Duranton , Ejaz Ghani , Arti Grover Goswami , William Kerr
Posted on: 20 Jul 2016

Optimising the allocation of factors of production – land, capital and labour - improves productivity. In India, where evidence suggests land is severely misallocated to inefficient manufacturing firms, access to financing is disproportionately tied to access to land. This column examines the link between the misallocation of land and access to capital through financial markets. A very strong positive correlation emerges between the two, consistent with the fact that land and buildings can provide strong collateral support for accessing finance from the credit market.
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What does China’s ‘new normal’ mean for India?
Sharmila Kantha
Posted on: 17 Jun 2016

China’s new normal – a growth rate of at least 6.5% - has been set as a target in its 13th Five Year Plan. In this article, Sharmila Kantha, Principal Consultant, Confederation of Indian Industry, contends that the potential implications of the Chinese deceleration for the Indian economy need to be analysed in detail.
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Why outward FDI should be encouraged
Natasha Agarwal
Posted on: 22 Apr 2016
Topics:   Economic Growth


The ‘Make in India’ programme seeks to incentivise global investors to manufacture in India. In this article, Natasha Agarwal, an independent research economist argues that efforts should also be made to support Indian businesses to invest abroad as several direct and indirect benefits accrue to the home country from outward foreign direct investment.
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Trade liberalisation and intergenerational occupational mobility in urban India
Reshad N. Ahsan , Arpita Chatterjee
Posted on: 18 Apr 2016
Topics:   Jobs , Trade


While the trade reforms of the 90s led to a rapid increase in trade in India, there are concerns regarding the likely impact of the reforms on inequality. This column shows that innovation induced by international trade led to an increase in the employment share of high-skill occupations, which in turn, allowed an increasing number of sons from underprivileged backgrounds to enter better occupations than their respective fathers.
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India-ASEAN economic linkages: Challenges and way forward
Deeparghya Mukherjee
Posted on: 10 Mar 2016
Topics:   Trade


India’s ‘Look East’ policy picked up steam with the conceptualisation of the Indian-ASEAN Free Trade Agreement in 2003. This column analyses the broad trends in India-ASEAN trade over the past decade, delves into the challenges involved in the economic relationship, and explores possible options for the way forward.
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How foreign inflows impact Indian manufacturing firms
Vaishnavi Sharma
Posted on: 25 Jan 2016
Topics:   Infrastructure


In the past few decades, India has emerged as one of the preferred destinations for foreign investors, with the manufacturing sector receiving a substantial proportion of total capital inflows coming into the country. Analysing firm-level data from the Indian manufacturing sector during 2001-2010, this column finds that while capital inflows significantly boost investment capacity of large firms, they do not seem to impact other performance indicators.
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Elephant vs. Dragon: Growth and development
Mahendra Dev
Posted on: 11 Dec 2015
Topics:   Economic Growth


The Indian economy expanded by 7.4% during July-September 2015, as compared to China’s growth rate of 6.9% over the same period. In this article, Mahendra Dev, Vice Chancellor of IGIDR, examines the prospects of the two economies in terms of economic growth, manufacturing and social indicators. He contends that the slowdown in China presents opportunities for India; however, even if India grows faster than China, it can catch up to it only after 25 years or so.
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India’s energy efficiency
Ejaz Ghani , Arti Grover Goswami , William Kerr
Posted on: 10 Nov 2015

India is the fourth largest energy consumer in the world but is not well endowed with energy resources, making efficiency in energy use very important. This column analyses the spatial dynamics of electricity usage in India’s manufacturing sector. Such an understanding can help in defining a more focused and targeted energy policy.
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Rise of informality in India’s tradable manufacturing sector
Ejaz Ghani , William Kerr , Alex Segura
Posted on: 13 Jul 2015
Topics:   Jobs


The vast informal sector in India affects everything from poverty to growth. This column presents new facts on how Indian job growth in manufacturing is concentrated in informal tradable industries, especially one-person establishments. These features are most closely linked to the urbanisation of informal Indian manufacturing, but subcontracting and rising female participation also appear to play noteworthy roles.
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Creating a services value chain between India and Thailand
Tanu M. Goyal , Arpita Mukherjee
Posted on: 08 Jul 2015

In the past two decades, India has signed several bilateral and regional comprehensive free trade agreements with Southeast Asian countries, which are likely to enhance services trade, investment and cooperation in the region. This column explores the prospects for creation of a services value chain between India and Thailand. It contends that integrating services may facilitate growth in Indian manufacturing by supporting production networks.
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The labour reforms debate: Broadening horizons
Radhicka Kapoor
Posted on: 01 Jun 2015
Topics:   Jobs


Even as the government has indicated that it plans to go slow on labour reforms and build consensus among all stakeholders, trade unions are protesting against “anti-labour” reforms. In this article, Radhicka Kapoor, an economist at ICRIER, emphasises the need to go beyond the narrow agenda of providing flexibility to firms to hire-and-fire and focus on decent work conditions and social security for workers in both organised and unorganised sectors.
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Assessing the economic effects of India ‘Looking East’
Ganeshan Wignaraja
Posted on: 22 May 2015

PM Modi recently said that India needs to move from ‘Look East’ to ‘Act East’ and that this is a key component of his government’s foreign policy. In this article, Ganeshan Wignaraja, an economist at the Asian Development Bank, assesses the impact of India’s ‘Look East Policy’ of 1991 on India-East Asia economic integration. He contends that closer ties with East Asia can lead to significant economic gains for India provided government and businesses work together to promote reforms and regional integration.
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Analysing net foreign earnings of India’s corporate sector
J. Dennis Rajakumar
Posted on: 22 Apr 2015
Topics:   Trade


The corporate sector is the linchpin of the ‘Make in India’ campaign. This column finds that the sector is increasingly relying on imported inputs and its net foreign earnings are on the decline, thus contributing to the country’s current account deficit. It suggests that ‘Make in India’ should emphasise domestic procurement of inputs and strengthen technological capabilities in the country.
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How serious are India’s manufacturing skill gaps?
Aashish Mehta
Posted on: 13 Apr 2015

It is widely believed that skill gaps are constraining Indian manufacturing, and closing these gaps has become a national priority. This column argues that the public debate on India’s skill gaps rests on weak conceptual foundations. While some industries do suffer from real skill gaps, others are constrained by commercial difficulties that may be better addressed through policies other than skill development programmes.
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Will India really grow faster than China?
Chetan Ghate , Peter Robertson
Posted on: 23 Mar 2015
Topics:   Economic Growth


According to the IMF, India will overtake China to be the fastest growing economy this year. In this article, Chetan Ghate and Peter Robertson assess the validity of this claim. In their view, the challenge for India is to not only catch up with China, but to also catch up with itself. Strong democratic institutions and the right economic reforms can work in India’s favour.
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Modi’s economic reforms: Foundation laid but time running out
Eswar Prasad
Posted on: 27 Feb 2015

Anticipation is running high that the Modi government will announce sweeping economic reforms in their first full-year budget, especially since their tenure so far has been bereft of any dramatic changes. In this article, Eswar Prasad, Senior Professor of Trade Policy, Cornell University, contends that Modi has laid a good foundation for reforms in his first nine months in office. But the hard work still lies ahead and time is running out.
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Where will jobs in manufacturing come from?
Radhicka Kapoor
Posted on: 23 Jan 2015
Topics:   Jobs


Conventional wisdom suggests that labour-intensive, small industries are critical for generating employment. However, this column argues that policies favouring one type of industry over another - labour-intensive over capital-intensive, or SMEs over large enterprises - will not create the jobs the country needs. Rather, the key is to encourage new firms to enter manufacturing and to provide an enabling environment for businesses to expand.
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India’s labour laws: Protecting to hurt
Devashish Mitra
Posted on: 14 Jan 2015
Topics:   Jobs


The state government of Rajasthan has begun making amendments to various labour laws in order to make labour markets more flexible. Summarising research on the impact of rigid labour laws on the growth of firms, Devashish Mitra argues that these steps are in the right direction. In his view, all outdated labour laws constraining India’s manufacturing need to be reformed.
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An economist’s view on the new government’s initiatives
Pranab Bardhan
Posted on: 19 Dec 2014
Topics:   Finance


In this article, Pranab Bardhan, Professor of Economics, University of California, Berkeley, provides his perspective on some of the initiatives of the new Indian government at the centre in their first six months in office – Swachh Bharat Abhiyan, Jan Dhan Yojana, ‘Make in India’ campaign, and the proposed changes to MNREGA. In his view, inefficient subsidies must give way to a basic monthly income for all citizens.
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Can services be a growth escalator in low-income countries?
Ejaz Ghani
Posted on: 01 Dec 2014
Topics:   Economic Growth


Just like the East Asian Tigers, the Lions of Africa are now growing much faster than the developed economies. However, this column shows that the growth escalators in Africa are different than in East Asia. The East Asian Tigers benefitted from a rapidly expanding manufacturing sector. The African Lions are benefitting from increases in productivity in the service sector, while the agricultural sector remains unproductive.
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What explains the increasing use of contract workers in Indian manufacturing?
Bibhas Saha , Kunal Sen
Posted on: 29 Oct 2014
Topics:   Jobs , Trade


Contract workers constituted about one-fourth of all workers in formal manufacturing in India in 2008. This column analyses the extent to which trade liberalisation and lack of labour reforms explain the increasing use of contract workers. It finds that in the presence of labour rigidities, increasing import penetration contributes to the ‘flexibilisation’ of the workforce.
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From ‘Mess in India’ to ‘Made in India’ as a global brand?
Maitreesh Ghatak
Posted on: 15 Oct 2014

PM Modi recently launched the ‘Make in India’ campaign to attract investment and boost manufacturing. In this article, Maitreesh Ghatak contrasts the campaign with the Chinese model of economic governance, and reflects on its potential to enable higher growth and poverty reduction.
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Do location-based incentives promote industrialisation?
Ritam Chaurey
Posted on: 23 Sep 2014

In a bid to industrialise the relatively under-industrialised states of Himachal Pradesh and Uttarakhand, the government implemented a tax incentive and capital subsidy scheme in the two states in 2003. This column finds the policy change led to new business creation and growth of existing firms in these states, most of which was not at the cost of neighbouring regions.
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International trade, domestic labour laws and India’s manufacturing sector
Devashish Mitra
Posted on: 22 Sep 2014
Topics:   Jobs , Trade


India has a multitude of restrictive labour laws and these have been found to adversely affect economic performance of manufacturing firms. This column illustrates how the impact of trade liberalisation on the domestic manufacturing sector depends on labour laws. It contends that more flexible labour laws will enable India to compete better in global markets.
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The labour reform myth
Pranab Bardhan
Posted on: 08 Sep 2014
Topics:   Jobs


A few Indian states have taken steps to relax the labour law pertaining to worker retrenchment. This article argues that while this is a step in the right direction, it may be unrealistic to expect big improvements in output and job creation simply as a result of such reform as there is no evidence to show that this law is the only, or even the main, constraint on growth
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What impedes SMEs from joining Asian supply chains?
Ganeshan Wignaraja
Posted on: 01 Sep 2014
Topics:   Jobs , Trade


While Small and Medium Enterprises play a significant role in job creation at the country level in Asia, they are underrepresented in Asian supply chains. This column analyses data from 5,900 manufacturing enterprises from five Southeast Asian economies - Malaysia, Thailand, Indonesia, the Philippines and Vietnam - to assess the extent of and constraints on SME participation in Asian supply chains.
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Impact of trade reforms on labour’s share of firm revenues
Reshad N. Ahsan , Devashish Mitra
Posted on: 25 Jul 2014
Topics:   Trade


The decline in labour’s share of national income in recent decades – a potential cause of rising inequality – has coincided with an increase in world trade. This column analyses the impact of trade reforms in India on labour’s share of total revenue at the firm level. It finds that the share of labour has been rising with reforms for small, labour-intensive firms.
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Two views on the Budget
Eswar Prasad , Bharat Ramaswami
Posted on: 12 Jul 2014

The Modi government’s first Budget has received a mixed response. Eswar Prasad and Bharat Ramaswami present two distinct views on the Budget. While Prasad is of the opinion that the Budget hits the right notes and emphasises some key policy priorities, Ramaswami believes that a coherent policy and worldview is yet to emerge.
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Growing through cities in India
Ejaz Ghani , William Kerr , Ishani Tewari
Posted on: 20 Jun 2014

Do cities grow through specialisation or diversity? This column measures specialisation and diversity for the manufacturing and services sectors in India. It finds that Indian districts with a broader set of industries exhibit greater employment growth. This is particularly true for low population densities, rural areas and unorganised sector, reflecting knowledge flow and the inclusive nature of employment growth due to diversity.
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Reversing premature de-industrialisation in India
Amrit Amirapu , Arvind Subramanian
Posted on: 26 May 2014

In countries across the world, de-industrialisation is taking place earlier in the development process. This column analyses how India fares in this regard. It finds that for most Indian states, the share of manufacturing in GDP peaked in the 90s, at levels far lower than comparable Asian countries, and began declining thereafter. Reversing this process is not going to be easy.
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The costs of employment protection
Sean Dougherty , Veronica Frisancho , Kala Krishna
Posted on: 30 Apr 2014

Restrictive labour laws govern the formal sector in India, whereas the informal sector is virtually unregulated. This column analyses the impact of reforms pertaining to employment protection legislation on firm performance. It finds that, on average, labour-intensive firms in states that have transited towards more flexible labour markets are 25% more productive than their counterparts in states with lower levels of reform.
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The puzzle of declining labour intensity in organised Indian manufacturing
Kunal Sen
Posted on: 25 Apr 2014
Topics:   Jobs


It is surprising to note that labour intensity in the organised manufacturing sector in India, particularly in industries with greater labour requirements, has shown a sustained decline over the past three decades. This column finds that the key explanation is trade reforms that targeted capital goods and brought their prices down over time. This inadvertently incentivised firms to invest in machines and employ fewer workers
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What makes cities more competitive in India?
Ejaz Ghani , William Kerr , Stephen D O'Connell
Posted on: 07 Mar 2014
Topics:   Urbanisation


Policymakers in both developed and developing countries want to make cities more competitive, attract new entrepreneurs, boost economic growth, and promote job creation. This column shows that the two most consistent factors that bring entrepreneurs in manufacturing and services to a district in India are its education and quality of local physical infrastructure.
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The crisis in Indian manufacturing
Jayan Jose Thomas
Posted on: 13 Dec 2013
Topics:   Economic Growth , Jobs


Manufacturing sector growth in India has fallen from over 9% to a dismal 1% in the past couple of years. This article discusses the factors that have caused a slowdown in organised and unorganised manufacturing. It contends that inadequate credit and infrastructure are key constraints, and the fate of the sector hinges on greater domestic investment and well-directed industrial policies.
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The Golden Quadrilateral: Highway to success
Ejaz Ghani , Arti Grover Goswami , William Kerr
Posted on: 10 May 2013
Topics:   Infrastructure


The Golden Quadrilateral, which connects four major cities in India, is the fifth-longest highway in the world. This column presents research that finds that by improving connectivity, the highway has helped with the efficient distribution of industries across locations. It has facilitated the shift of land and building intensive industries from the core to peripheries of cities, and has made medium-sized cities more attractive locations for manufacturing activity.
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What do Indian CEOs do?
Oriana Bandiera
Posted on: 15 Mar 2013

While the Indian manufacturing sector has experienced rapid growth since the early 1990s, it is characterised by large productivity differences across firms and presence of several low productivity firms that use poor managerial practices. This column examines differences in CEOs’ management style via their time use to provide new insights on the observed diversity across firms.
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Is India’s manufacturing sector moving out of cities?
Ejaz Ghani , Arti Grover Goswami , William Kerr
Posted on: 15 Feb 2013
Topics:   Urbanisation


While urbanisation is moving ahead at a rapid pace in India, industrialisation has slowed down. What explains this disconnect between urbanisation and infrastructure? This column presents results of a study that suggests that the formal manufacturing sector is moving from urban to rural locations, and the informal sector is moving from rural to urban locations.
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Helping India’s informal manufacturing sector to grow
Kunal Sen
Posted on: 09 Jan 2013

India’s informal manufacturing sector is dominated by small household enterprises that keep everything within the family – but these firms are often the least productive. Why aren’t these small enterprises making the changes needed to bloom and grow? This column asks whether the problem is access to finance and what can be done about it.
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What explains gender disparities in economic participation in India?
Ejaz Ghani , William Kerr , Stephen D O'Connell
Posted on: 21 Aug 2012
Topics:   Gender , Jobs


The UN Global Gender Gap data shows that women’s economic participation and opportunity is worse in India than in 95% of all other countries studied. This column attempts to uncover what drives the gender balances of new enterprise in India and suggests measures for promoting women’s entrepreneurship and economic participation.
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Manufacturing, management and mysteries
Nirvikar Singh
Posted on: 27 Jul 2012

The private sector is crucial to India’s development. This column asks how it can be more effective. Looking at a large sample of Indian manufacturers it suggests that what many firms may be missing is good management.
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