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The following OECD assessment and recommendations summarise chapter 2 of the Economic survey of India published on 9 October 2007.
This chapter examines the growth performance of the Indian economy more closely and identifies areas where further reforms could enhance growth and make it more balanced. The first section looks at the movement of production in different sectors of the economy and finds that India has been following a unique development path with the share of manufacturing in total output not increasing as income levels increase. The next section looks at possible reasons for this development and finds that there are deeply rooted problems in the manufacturing sector that have constrained its development, although some of these have been eased with reforms. India’s manufacturing firms were not able to fully exploit their comparative advantages of low labour costs and have remained extraordinarily small in scale – yet capital intensive – restraining productivity gains as well as job creation. In the past five years, there have been gains in employment, driven by some liberalisation of labour laws, but many of these jobs are of low quality (casual employment, outside the formal sector with very low wages), and few have legal protection. For large firms, there remain substantial obstacles to restructuring employment, limiting their ability to compete effectively.
How to obtain this publication
The Policy Brief (pdf format) can be downloaded in English. It contains the OECD assessment and recommendations. The complete edition of the Economic survey of India 2007 is available from:
For further information please contact the India Desk at the OECD Economics Department at firstname.lastname@example.org. The OECD Secretariat’s report was prepared in the Economics Department by Richard Herd, Paul Conway and Sean Dougherty, under the supervision of Willi Leibfritz. Research assistance was provided by Thomas Chalaux.