Inter-State Analysis of the Organised Manufacturing Sector in India

The manufacturing sector of a country is generally considered an engine of growth. The performance of the manufacturing sector in India has become a central issue during the post-reform period which needs to be assessed empirically. The share of employment, output, gross value added and capital of the industrially developed states such as Maharashtra, Gujarat and Tamil Nadu was high in the organised manufacturing sector. Even so, their growth rates of the organised manufacturing sector were quite low compared to the other small states such as Uttarakhand, Jammu and Kashmir and Himachal Pradesh. The higher growth rates of these states could be the result of the narrow industrial base which has enabled the State Governments to focus on a few industries. Due to their targeted policies, these states have encouraged many industries to set up their plants there. Industrially developed states showcased less concentration of industries in their manufacturing sectors while industrially less developed states such as Odisha, Jharkhand, Chhattisgarh and Goa registered high concentration over the period. It is also observed that industrially developed states have more localised industries whereas Andhra Pradesh, Chhattisgarh, Kerala and Odisha have only a few localised industries. The assessment of the factor intensity of the states/UTs reveals that the industrially developed states made higher use of the capital-intensive techniques. Over the period of the study, the states have exhibited shifts in their factor intensities used in the production process. Uttarakhand, Chhattisgarh and Jammu and Kashmir have registered higher number of workers per factory unit. The study concludes that there is still high potential in the manufacturing sector of the states/UTs which needs to be exploited through concrete policy actions over the coming years.