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Using detailed sectoral data from India KLEMS, we analyze the role of structural change in determining India's aggregate productivity growth during 1980-2011. In general, the impact of static structural change on aggregate labor productivity growth has been positive, as workers moved to sectors of a relatively higher labor productivity level. However, dynamic reallocation effects-worker movement to fast-growing industries-have not been observed. The pro-market reforms in the 1990s did help a TFP growth-enhancing allocation of capital across sectors. The relative importance of the manufacturing sector for aggregate TFP growth has increased in recent years. Yet, India's structural transformation features the absorption of workers in the construction sector and slow and stagnant job creation respectively in services and manufacturing sectors. This poses a challenge, as the potential for productivity growth in construction and services are limited, and the changing nature of manufacturing production provides less room for absorbing less-skilled workers.

Using the latest (2016) version of the India KLEMS Dataset and following the KLEMS approach this paper analyzes growth, structural change and productivity advance in the Indian economy in the period 1980-2014. The KLEMS approach takes into account the roles played by capital, labour, energy, materials and services inputs in output growth by industries. In our analysis, we divide the

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different policy regimes deb kusum das, abdul a. erumban, suresh aggarwal, and sreerupa sengupta 1 This chapter is from a paper presented at the 3rd world KLEMS conference held in Tokyo, Japan on May 16-17, 2014, organized by REITI (Japan). The authors would like to thank REITI for travel and other support for Deb Kusum Das and Suresh Aggarwal, and all conference participants especially Barbara Fraumeni and Harry Wu for useful comments. Detailed comments by Marcel Timmer and Dale Jorgenson on the first draft are also acknowledged. The authors thank K. L. Krishna and B. N. Goldar for advisory support in discussions relating to the construction of India KLEMS dataset. Financial support from Reserve Bank of India in building the India KLEMS dataset is gratefully acknowledged. The usual disclaimers apply. 2 The recent set-backs, particularly after 2012, are sometimes attributed partly to the global financial crisis (Mohan and Kapur 2015). However, multiple factors played a substantial role in dragging down India's growth. These include both internal and external factors including soaring inflation, increased fiscal and current account deficit, and a weakening of Indian Rupee.