Premature Deindustrialization in India and Re thinking the Role of Government [La désindustrialisation précoce en Inde : pour un nouveau rôle du gouvernement]

The paper is on premature deindustrialization that India is experiencing and the role that government must play. Significant economic reforms were initiated in India in the early 1990s. These have brought about significant changes in the economy, but these have failed to stimulate the manufacturing sector. In fact the situation is worse than that in the pre-reforms period. After discussing the nature of the manufacturing crisis, the paper focusses on three important aspects – import liberalization, foreign direct investment and technological development. The paper analyses the impact of reforms and what has been the official response. The paper stresses the vital importance of industrial policy in India today. It argues for an industrial strategy coordinated and led by the government. The objective of such an intervention is not to replace the private sector but to supplement the efforts of the private sector and enable it to play a more proactive role.