Answer:

♤ The principal question which remains unanswered is that why the speeding up of reforms after 1991 did not yield faster outputs, employment and labour intensive growth in the Indian manufacturing sector. Many experts say that the reforms have remained incomplete, with the persistence of the labour market rigidities (lack of entrepreneurial freedom to hire and fire workers at will), infrastructure bottlenecks and incomplete financial integration, including full convertibility of the currency.

♤ A prime reason attributed to such a scenario is that India had followed idiosyncratic policies of promoting skill intensive industries, discouraging labour intensive manufacturers- a pattern that has not changed after the reforms due to labour market rigidities. Also the average Indian firms tend to be smaller as workers cannot be fired, preventing them from reaping the advantages of the economies of scale production. Also, there need to be steps to provide more flexibility to employers to adjust employment levels along with more fairness and security to employees.

♤ Infrastructural bottlenecks are also throttling the industrial progress which is often blamed on lack of resources, enormous cost and time overruns in project completion and poor public management in general. Attributing these problems to public ownership, the reforms have encouraged entry of private and foreign capital in these industries. Besides, the cost of doing business is much higher in India than in other countries due to the plethora of forms and inspections that manufacturers have to comply with, some of them arising out of legislations long pending review, such as the Factories Act. The streamlining of these requires action by government agencies in the state and in the centre.

♤ Besides, the government had released its new National Manufacturing Policy with an aim to increase the sectoral share of manufacturing in GDP to at least 25% by 2022; to increase the rate of job creation so as to create 100 million additional jobs by 2022; and to enhance global competitiveness, domestic value addition, technological depth and environmental sustainability of growth. The policy envisages specific interventions broadly in the areas of industrial infrastructure development through the creation of National Investment and Manufacturing Zones (NIMZs); improvement of the business environment through rationalization and simplification of business regulations; development of appropriate technologies especially green technologies for sustainable development and skill development of the younger population.