1991 reforms incomplete, failed to drive India's industrial growth: expert

India's landmark 1991 economic reforms, while significant in opening the economy to global markets, have not adequately addressed the fundamental drivers of sustained industrialisation, according to development economist Deepak Nayyar. The incomplete nature of these reforms has left India vulnerable to economic stagnation, despite the window of opportunity presented by its young, growing workforce.

Nayyar highlights that the reform agenda, though transformative in dismantling the licence raj and liberalising trade and investment, did not sufficiently strengthen manufacturing capacity or create the institutional frameworks necessary for rapid industrial development. The absence of comprehensive structural transformation has constrained India's ability to absorb its expanding labour force into productive, high-value sectors—a critical prerequisite for demographic dividend realisation.

The economist warns that without addressing these vulnerabilities, India risks becoming trapped in the middle-income bracket, a fate that has befallen several developing nations that achieved initial growth gains but failed to sustain momentum. The challenge lies in completing the unfinished business of economic restructuring, particularly in enhancing manufacturing competitiveness, infrastructure investment, and skill development.

To realise its demographic potential and avoid economic stagnation, Nayyar argues, India must pursue deeper reforms that go beyond trade liberalisation. These should encompass strengthening institutions, improving human capital development, and creating ecosystems conducive to sustained industrial growth and innovation. The window of opportunity remains open, but time is limited before the demographic advantage shifts into a demographic liability.