Published: 26th April 2018
What happened to Indian markets after LPG policies? IIT-M prof's book has all the answers
'Hastening Slowly' talks about India's industrial growth in the era of economic reforms and the major changes in the 1990s, most of which were aimed at changing the industrial landscape
In the era of liberalisation, India's economic policies were geared towards economic growth. Post-independence India’s diverse economy witnessed major changes in the 1990s, most of which were aimed at changing the industrial landscape. Hastening Slowly, authored by M Suresh Babu, Associate Professor, Department of Humanities and Social Sciences, Indian Institute of Technology Madras, provides a comprehensive analysis of the changes in the market structure and performance of Indian manufacturing industries since the onset of these policy changes.
"India has been going through a very peculiar path in terms of industrialisation. It has bypassed industrialisation in the conventional sense. From a predominantly agrarian economy, we have moved to a service-oriented economy, unlike a lot of developing countries. So, India has been trying to push this whole pace of industrialisation with a variety of policies. A lot of discussions were doing the rounds in terms of policy constraints. And in 1991, we liberalised the industrial sector to relieve the earlier constrained economy. The idea was that if there is more competition in the industrial sector, there will be good returns and better output,” says M Suresh Babu. The book describes whether these policies, which were intended to infuse competition into the sector, have been successful in terms of changing the basic structure of the manufacturing sector itself in India — this is the broad narrative the book tries to unravel.
Hall of fame: Suresh Babu was also an Associate Professor at the Institute for Social and Economic Change, Bengaluru
The book also talks about the set of policies banking on de-licensing, deregulating and so on, which has diluted the so-called institutional barriers towards industrialisation and has led to the construction of market barriers. "So, when you have market barriers, entry of new firms becomes difficult. Now what has happened is that these firms can enter, but their survival becomes difficult due to the existing firms fast have already built market base barriers. Due to this, the basic structure of industries has not undergone much of a change after the reforms. It has also got implications in terms of productivity growth in the manufacturing sector. On the whole, the book argues that while the macroeconomic reforms are fine, what we need now are the microeconomic changes," he adds.
As a lot of industries are moving away from cities to the suburban areas, it has accelerated the growth of the unorganised manufacturing sector in the country. "The scale of operations of enterprises has been a problem now. In India, there is an expansion of unorganised activities due to the new trend of industries moving away from cities to suburban areas, which has accelerated the growth of unorganised manufacturing in the country. But the problem here is in unorganised manufacturing, the number of manufacturing industries that are growing is not efficient in terms of production. So, this strategy of banking on unorganised sector itself is not a viable thing in the long run," concludes Suresh.