Sources of Corporate Profits in India: Business Dynamism or Advantages of Entrenchment?

By Michael Walton, Anusha Nath, Ashoka Mody

January 1, 2011

Preview Citation

Format: Chicago

Michael Walton, Anusha Nath, and Ashoka Mody. Sources of Corporate Profits in India: Business Dynamism or Advantages of Entrenchment?, (USA: International Monetary Fund, 2011) accessed March 24, 2025

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Some see India’s corporate sector as the fundamental driver of recent and future prosperity. Others see it as a source of excessive market power, personal enrichment, and influence over the State, with an ultimately distorting influence. To inform this debate, this paper analyses the correlates of profitability of firms listed on the Bombay Stock Exchange, covering a dynamic period-in terms of firm entry and growth-from the early 1990s to the late 2000s. Overall, the results do not provide support for the systematic exercise of market power via the product market. At least for this period, the story is more consistent with a competitive and dynamic business sector, despite the continued dominance of business houses and public sector firms in terms of sales and assets. Those with opposing views can, with justification, argue that our analysis does not cover influences, such as corporate governance and state-corporate relations, which may paint a less flattering picture of the corporate sector’s role. Those broader themes deserve further attention.

Subject: Business enterprises, Competition, Corporate sector, Econometric analysis, Economic sectors, Financial markets, Housing, National accounts

Keywords: BSE firm, Business enterprises, Business house, Competition, Corporate sector, Firm growth, Global, Growth, Housing, India, Market power, Profit rate, Profitability, Sales growth, WP

Publication Details

Pages:

39
Volume:

---
DOI:

---
Issue:

---
Series:

Working Paper No. 2011/008
Stock No:

WPIEA2011008
ISBN:

9781455211869
ISSN:

1018-5941

FACTSHEETS

RESOURCES

TOPICS

Flagship Publications

Other Publications

IMF reports and publications by country

Regional Offices

All News

See Also

For Journalists

Press Center

RESOURCES

FLAGSHIPS

KEY SERIES

IMF NOTES

IMF Working Papers