Asian Journal of Economics, Business and Accounting

This study examines the performance of India’s organised manufacturing sector during the post-reform period from 1991-92 to 2022-23 using secondary data from the Annual Survey of Industries. Growth patterns were assessed for firms, employment, invested capital, input, output, net value added, net income, and profit using compound annual growth rates, annual growth rates, productivity, and employment elasticity. The analysis also applied a Vector Error Correction Model to examine the dynamic relationship among output, labour, and capital. Over the full study period, industrial output grew by 13.33 per cent, while employment grew by 2.61 per cent, indicating weak employment generation relative to output growth. Input grew by 13.65 per cent, broadly alongside output, supporting the study’s finding of constant returns to scale. Overall employment elasticity was 0.20, while productivity declined from a peak of 1.33 in 1996-97 to 1.18 in 2022-23. During 2019-20, output and input growth were -3.22 per cent and -3.18 per cent, respectively, employment growth was 2.11 per cent, and net value added declined by 5 per cent. The VECM results indicate a long-run cointegrating relationship among output, labour, and capital, with adjustment towards long-run equilibrium occurring primarily through capital rather than output or labour. Overall, the findings describe a post-reform manufacturing trajectory characterised by strong output growth, relatively limited employment growth, and increasing dependence on capital.