India's Economic Growth Trajectory since 1991: An Analysis of Structural Breaks

This paper examines the growth dynamics of the Indian economy and its structural change over the period since liberalization which is complemented by structural break analysis. It is true that the Indian economy has experienced a spurt in the growth of its real GDP, which has mainly been characterised by a service sector-dominated growth process coupled with a declining role of its primary and secondary sectors, albeit those two sectors provide major sources of employment opportunities to the vast majority of working-age populations in India. We find that during post liberalization period Indian economy has achieved a tremendous breakthrough in the growth of its real GDP, which hovers 6% to 9% per annum from 2007 to 2010, followed by a minor declining trend and again by an increasing trend. However, in the growth process service sector plays a dominant role whose contribution to real GDP ranges from 47.5% in 1990 to 61.2% in 2019, whereas the relative contribution of manufacturing sector to real GDP has been increased marginally from 19.82% in 1990 to 20.76% in 2019 which is followed by a fall in the contribution of agricultural and allied sector from 42.2% in 1990 to 18.02% in 2019. Therefore, it follows that the Indian economy has indeed achieved a structural change that is not compatible with the conventional development theoretical perspective. Interestingly, we also find a structural breakthrough of the growth of real GDP since 2007-08, while the agricultural and allied sector has experienced a structural break since 1998, and the manufacturing sector has experienced a structural break since 2009.