Structural Change and Growth of Manufacturing Industries in Punjab: Post-Reforms Analysis

Abstract

After the economic reforms of July 1991, the process of structural change led to jumping from the primary sector of the economy to tertiary by surpassing the secondary sector in India and Punjab in particular. Indeed, this process led to a rapid decline in the capacity of the manufacturing sector to offer jobs and the limited scope of the modern services sector to absorb relatively unskilled labour that was displaced from agriculture, which resulted in uneven growth of the economy, and increased unemployment. The study analysed these structural changes and its implications on the growth of production and employment of the manufacturing sector in Punjab. It was found that since the 1990s, the growth of manufacturing sector in Punjab was stagnant, whereas the trends in production and employment were declining. So, to achieve the optimum level of employment opportunities and mitigate the current crisis looming in the state of Punjab, there is a need to design a mechanism for encouraging investments in manufacturing sector particularly, in small scale industries as these industries have a greater advantage over medium/large scale units, because it uses local inputs, creates more employment opportunities and needs less start-up capital than the latter.