Question

"Industrial sector performed poorly in the economic reform period." Elucidate the given statement.

Hint:

Privatisation of PSUs can lead to better efficiency and global competitiveness, but it also requires careful management to ensure fair outcomes for workers and stakeholders.

Answer 1

Industrial Sector's Poor Performance in the Reform Period: While India’s economic reforms from 1991 onwards led to significant growth in many sectors, the industrial sector faced challenges: - Slow Growth in Industrial Output:
Despite liberalisation, industrial growth remained slow for certain industries, especially traditional sectors that were not competitive globally. - Infrastructure Constraints:
The lack of proper infrastructure such as power supply, transport, and technology hindered the growth of the industrial sector. Inadequate infrastructure increased costs and made Indian products less competitive in the global market. - Lack of Investment in Manufacturing:
While services grew rapidly, the manufacturing sector struggled to attract investment. The focus on IT and services meant that manufacturing took a backseat in the post-reform period. - Global Competition:
The opening up of the economy exposed Indian industries to international competition. Many Indian industries were not well-prepared to compete with cheap imports, leading to a decline in their market share. Thus, the industrial sector's performance was constrained by multiple factors during the reform period, preventing it from achieving the desired growth rates.