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ABSTRACT
An important aspect of the recent growth pattern of the Indian economy has been the apparent
sluggishness in the output and employment growth in the manufacturing sector, in spite of a
period of relatively high growth rate of GDP. The contrast with the experience of China, not to
mention the historical experience of developed countries, including those of East Asia, has been
widely noted. This paper has attempted to bring into focus an aspect of the manufacturing
sector of India, which might indeed be the heart of the problem. This is the development and
persistence of the peculiar size structure with its ‘missing middle’— even when we concentrate
our attention on the
non-household
problem of the ‘missing middle’ in Indian manufacturing is studied in the context of the
experience of other Asian economies, and its implications for growth and equity are analyzed.
The Indian experience of manufacturing growth contrasts with, on the one hand, the more
welfare-enhancing historical experience of East Asia economies with their more balanced size
distribution of firms, and on the other hand, the more problematic experience of a few countries
like Thailand and China, with the distribution markedly skewed to large firms. The paper
concludes with an outline of possible critical factors in the development and persistence of this
phenomenon in the Indian economy—a topic which is the subject of an on-going research
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