A manufacturing sector revival is a must to uplift our economy

India requires structural changes that go beyond cosmetic policy tweaks to address the real issues

- HIMANSHU is associate professor at Jawaharlal Nehru University and visiting fellow at the Centre de Sciences Humaines, New Delhi

Gross domestic product (GDP) data released last month confirm fears of an imminent economic slowdown in India. While the decline in growth to 5.4% in the second quarter of 2024-25—part of a six-quarter downtrend—may have rung the alarm bells, signs of trouble have been visible for a while. Among these was weak manufacturing, which grew only 2.2%. While the debate on whether this is cyclical or structural is likely to continue, there is certainly a cause for worry as far as the manufacturing sector is concerned.

Detailed estimates from the National Accounts (NA) are available up to 2022-23. These suggest that the sector has grown at a paltry 2.5% annually during the years from 2017-18 to 2022-23. Since 2018-19, the last full year before the pandemic, growth has been just 1.8% per year. The net result is that the share of manufacturing in national income in 2022-23 is lower than it was in 2017-18. However, national accounts present only a part of the problem.