Industrial Policies in India: Did They Work?

Author
Raavi Aggarwal
Content Type
Working Paper
Institution
Centre for Sustainable Employment, Azim Premji University
Abstract
This article analyses relationships between the implementation of state-level industrial policies in India and manufacturing sector economic performance (employment and gross value added), utilising data from the Annual Survey of Industries conducted by the Government of India. I employ panel data fixed-effects regression models to evaluate the associations between the industrial policy and state-industry specific performance over the 2007-08 to 2014-15 period, incorporating potential effects of the state government's political alignment, infrastructure provision and educational expenditure in the state. The results provide evidence of a positive correlation between industrial policy implementation and firm output and employment, by around 12.6 - 14 per cent. However, subsequent introductions of an industrial policy are negatively associated with employment and are uncorrelated with industrial GVA. This analysis has implications for economic policy in light of the Central Government's plans to implement a revised industrial policy at the national scale.
Topic
Economics, Industrial Policy, Employment, Manufacturing
Political Geography
India