Performance of Non-Financial Private Corporate Sector of India in the Post Reform Era

Abstract

India embarked on its new tryst with destiny with a massive reforms initiative twenty years ago largely dismantling the restrictive industrial environment. Bringing almost an end to the license raj, nearly finishing up MRTP restrictions and reservations the government of India aimed at empowering the country’s private sector with a view to making India a star growth economy along with Brazil, Russia and China. Reforms delivered in terms of overall growth. With a modest growth of 5.5 per cent during 1980-2002, the Indian economy in the last almost one decade has graduated to the 8th fastest growing economy in the world with China leading the race. How much of the credit of such growth can be assigned to the private sector of the country? Has this been largely because of an enhancement in the ability of the private sector in terms of an increase in its financial performance? The present study makes a careful attempt towards answering such questions. Using the time series data on the standard performance indicators and ratios reflecting the extent of performance of this sector from the on-line source of the Reserve Bank of India (RBI) the present paper tries to study the following: the growth trend of the non-financial private corporate sector of India; extent of influence of number of companies on the sales growth in the sector; and the magnitude of impact of growth in sales on other leading performance parameters of the sector.