Despite significant shifts towards services and market liberalisation since 1991, India’s industrial sector remains stagnant, posing challenges for sustainable job creation and high-income ambitions by 2047.
India’s economic landscape has been reshaped far more by the 1991 liberalisation drive than by any single policy moment since independence. Business Standard’s account of the post-reform era shows a long shift away from a state-led, shortage-prone model towards one defined by larger markets, more competition and a stronger role for private enterprise. Yet the transformation has been uneven: the economy has expanded, but its sectors have not moved in step.
The clearest change has come in the balance between farming and services. According to Business Standard’s data review, the primary sector’s share of gross value added drifted down through the 1990s, fell more sharply after 2002-03 and reached about 18 per cent by 2025-26. Agriculture alone, which accounted for roughly 30 per cent of gross value added in 1991-92, had fallen to about 17 per cent by 2025-26. Over the same period, services strengthened further, rising to around 56 per cent of gross value added. Research cited in related studies points in the same direction, with services absorbing much of the economy’s structural shift after reform.
Industry, by contrast, has been the least changed part of the story. Business Standard notes that the secondary sector, which includes manufacturing, utilities and construction, remained broadly stuck in the mid-to-high 20s for much of the period and is still close to where it started, at about 25 per cent of gross value added. That matters because it underscores a familiar policy challenge: India has become more modern and more open, but it has not yet built an industrial base large enough to absorb labour leaving agriculture at scale. Other analyses also suggest a persistent mismatch between output and jobs, with farming still employing a far larger share of workers than its contribution to GDP would imply.
That gap helps explain why the 1991 reforms are often seen as necessary but incomplete. Academic work on India’s post-reform growth has linked structural change to a meaningful share of productivity gains, while other studies have found that the tertiary sector has played a disproportionately large role in that improvement. Even so, the broader verdict from economists remains cautious. The reforms helped India move from scarcity to scale, but they also left open the harder task of broad-based job creation, deeper manufacturing growth and further structural reform if the country is to sustain fast growth on the path towards high-income status by 2047.
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