“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?

Since the 1991 reforms, India's growth has been led by services, while industry — especially manufacturing — has lagged, its share of GDP stagnating around 25-27 percent against a target of raising it substantially. This 'premature deindustrialisation' constrains job creation.

Reasons for the lag

• Infrastructure deficits in power, logistics and land raised costs and eroded competitiveness.
• Rigid labour laws and complex regulation discouraged large-scale, labour-intensive manufacturing.
• Difficulties in land acquisition, credit and a high cost of capital held back investment.
• Inverted duty structures, weak R&D and low technology absorption limited value addition.
• Cheaper imports, especially from China, displaced domestic production in several sectors.

Recent industrial policy changes and their capacity

• Make in India and eased FDI norms aim to attract manufacturing investment.
• GST created a unified market and reduced cascading taxes and logistics friction.
• The Insolvency and Bankruptcy Code improved credit discipline and exit.
• Production Linked Incentive (PLI) schemes reward incremental output in priority sectors.
• Labour codes and ease-of-doing-business reforms cut compliance burden.

These can raise industrial growth if implementation, skilling and infrastructure keep pace, but structural issues in land, labour and technology need deeper reform.

Conclusion

Recent measures are promising and address several bottlenecks, yet sustained industrial acceleration requires complementary reforms in factor markets, skills and R&D to make manufacturing globally competitive.