Title: Deregulation and liberalisation, business cycles and performance of Indian industry

Authors: D. Tripati Rao; Sachin Bhatia

Addresses: Business Environment Area, Indian Institute of Management Lucknow, Prabandh Nagar, Off Sitapur Road, Lucknow 226013, India ' Barings Equity Private Limited, New Delhi, India

Abstract: We examine inter-firm performance variation over two decades of deregulation and libersalisation measures that aimed at removing the barriers to competition and access to new technology in Indian industry. This is to understand how firms across industries have responded and performed over business cycles. In the structure-conduct-and-performance (S-C-P) framework, using step-wise discriminant analysis, we find debt ratio, export intensity, gross fixed assets, advertising, marketing and distribution expenses acted as principal discriminants between pre- and post-deregulation periods. Comparing short- and long-term impact of liberalisation measures, we find new investment, export intensity, gross fixed assets growth, capital output ratio, employee cost, advertising, marketing and distribution expenses and sales growth are the significant discriminants that differentiate the 1991-1993 and 2005-2007 period. Trends in the growth contributing sectors as well as major sub-sectors of manufacturing broadly confirm the prediction of discriminant analysis of slowdown of the Indian economy post-global financial crisis.

Keywords: firm performance; business cycles; S-C-P framework; structure-conduct-and-performance; discriminant analysis; deregulation; liberalisation; debt ratio; new investment; export intensity; fixed assets growth; capital output ratio; employee costs; advertising expenses; marketing expenses; distribution expenses; sales growth.

DOI: 10.1504/JGBA.2016.079854

Journal for Global Business Advancement, 2016 Vol.9 No.4, pp.320 - 330

Published online: 19 Oct 2016 *

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