Sources of Growth in India

Abstract

Laveesh Bhandari and Sumita Kale study the underlying factors behind the acceleration in India’s economic growth and its puzzling structure. The services sector has been the engine of growth for the economy, with different sub-sectors taking the lead in different time periods as each responded to a policy change such as bank nationalization in the seventies, construction boom in the 2000s, et cetera. However, industrial reforms have not resulted in a sustained high growth due to constraints in land, labour and infrastructure. States have followed diverse trajectories, initial conditions in each leading to differential responses to central reforms. Growth and governance are now crucial for electoral outcomes, making them a focal point for the path ahead.