Integrated impact of highway infrastructure, labour productivity and circular material consumption on Indian manufacturing growth: A system dynamics perspective

Manufacturing sector growth continues to be topical in the growth journey of Indian economy. The purpose of this paper is to present the modelling and analysis of the combined impact of three key driving sub-systems on the Indian manufacturing growth. It has provided relevant insights and recommendations for its sustainable growth.

The impact of three key driving sub-systems: quality of highway-related infrastructure, manufacturing labour productivity and circular material-consumption in the growth of manufacturing has been studied. A System Dynamics (SD) based model to understand long-term implications of the policy variables on manufacturing growth has been developed. Five scenarios have been simulated for analysis.

Seven policy variables have been identified which have a significant impact on Indian manufacturing growth. Some relevant insights from the analysis of SD based system-behaviour have been provided which would facilitate the manufacturing growth.

The paper has addressed the dynamics of only three sub-systems in the study of manufacturing growth. The other sub-systems which also have an impact on the manufacturing growth: Good governance, education quality and technology are recommended to be studied through SD based modelling.

Specific recommendations for accelerating the manufacturing growth have been made in the paper which has strong practical implications for growth of Indian economy.

Manufacturing sector continues to have a significant impact on the prosperity of India. It facilitates in enhancement of employment and the micro-economic health aspects. Therefore, there is a need to understand the dynamics of the key policy variables affecting manufacturing growth which is very relevant for the society at large.

An application of the SD approach to analyse long-term implication of policy variables of three sub-systems that have a significant impact in manufacturing growth and five specific recommendations to the policy makers is the value-add.