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This recent spurt in growth is propelled by radical reforms such as the removal of
restrictions on foreign investment and industrial de-licensing. Increasingly the success of
manufacturing industries is dependent on innovations, research and development. It is
critical not only to remain competitive but also, significant advantages can be gained by
developing and commercializing new technologies. Until the early nineties, corporate
financial management in India was a relatively drab and placid activity. There were not
many important financial decisions to be made for the simple reason that firms were given
very little freedom in the choice of key financial policies. Bank credit was provided in the
form of an overdraft (or cash credit as it was called) on which interest was calculated on
daily balances. However, the rapid growth of the services sector much before the
manufacturing industry attaining maturity is not a healthy sign. This paper intends to analyse
the contribution made by these two sectors for the economic development.

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