The Economic reform process initiated by the Government of India since July 1991 envisaged a major shift from an over regulated and protected regime to a deregulated and market oriented system. The period since 1991 has seen some important changes in the approach to and the content of India's economic policy. These policy reforms started yielding encouraging results soon after the initial adjustment period and the economy was set on reasonably high growth path. The performance of the economy was fairly good, peaking between 1994 and 1997 when the GDP growth consistently registered a rate higher than 7%. However, the magic of liberalization which has been working well with positive impact on the economy has not been without its hiccups. The year 1996-97 witnessed a sharp slow down in industrial growth and the slump continued through 1998-99. The primary market is known to be in deep coma for the three years. These arguments lead us to the tentative hypothesis that is not the slow down in the economy that has triggered the slow down in the manufacturing sector, rather, it is slow down in the manufacturing sector that has slowed down the economy in recent years. This study is an attempt at providing some evidence to this hypotheses by investigating the performance of the Indian manufacturing sector been through the 1990s. the findings are based on 5,600 private manufacturing companies available on the data base.