The Review of Finance and Banking Volume 13, Issue 2, Year 2021 http://dx.doi.org/10.24818/rfb.21.13.02.04, Pages 135146 S print ISSN 2067-2713 online ISSN 2067-3825 GOVERNMENTAL ANNOUNCEMENTS AND INDIAN STOCK MARKET: EVIDENCE FROM INDIAN MANUFACTURING SECTOR MAHESH DAHAL AND JOY DAS Abstract. The Indian Manufacturing sector lags behind in contributing to economic devel- opment, as compared to its peer nations and therefore, to boost the sectors contribution to the economy and to transform the economy into a cashless economy, the government of India had announced three major steps, Make in India, Demonetization and GST. In the present study using event study methodology, the immediate impact of the announcements on the stock of the companies from the Indian Manufacturing sector is examined and found that the announcement of the Make in India positively inuenced the security returns. In contrast, negative impact on the security prices is witnessed on the announcement of Demonetization, whereas the GST implementation has no impact. 1. Introduction Indian economy, the fastest growing economy in the world, which is also growing as a hotspot for investment among the worlds emerging nations (Thippeswamy, 2018), is lagging in the man- ufacturing sector compared to other sectors of the economy. It becomes more evident when the contribution of the manufacturing sector to the GDP of India is observed (India Brand Equity Foundation, 2015), (Bhat, 2014), (Mehta & A, 2017). In a growing economy, the development of the manufacturing sector is of great signicance as the industrys contribution to the over- all development of a nation is crucial (Cantore et al., 2017), (Haraguchi, Cheng, & Smeets, 2017), (Fernandez & Palazuelos, 2018) as observed in developing countries like Thailand, China and Indonesia, where the industry contributes 25 percent; 27 percent; and 20 percent to GDP respectively (Szirmai & Verspagen, 2015). In contrast, the Indian manufacturing sector con- tributes only 14 percent to GDP, which can be a setback for economic growth (The World Bank, 2019). Taking into account the importance of the Manufacturing sector, the government of India, between the years 2014 to 2019, has taken three major steps. First, the "Make in India" in September of 2014, a landmark step taken toward enhancing the manufacturing capacity and encouraging the productivity of the Indian rms. The campaign mainly stressed stimulating domestic investment, improving the ease of doing business and attracting foreign investment in the manufacturing sector. The government identied 25 (twenty-ve) sectors, including Textiles, Food Processing, Defense, Railways, Construction, and Tourism, for leading the campaign with almost 100% FDI (Sawhney, 2016; Shukla, Purohit, & Gaur, 2017). Second, to curb corruption and black money Government of India, on November 8, 2016, announced Demonetization. Among other sectors, the manufacturing sector of India was also a/ected by the Demonetization, Received by the editors September 7, 2021. Accepted by the editors December 23, 2021. Keywords : Indian Manufacturing Sector, Make in India, Demonetization, GST Implementation, Event Study Methodology. JEL Classication : G11, G14, G18. Mahesh Dahal, PhD Student *(Corresponding Author), Research Scholar, Department of Commerce, Tripura University, Suryamaninagar, Tripura- 799022. E-mail: maheshdahal118@gmail.com. Joy Das, PhD, Assistant Professor, Department of Commerce, Tripura University, Suryamaninagar, Tripura- 799022. E-mail: joy.kxj@gmail.com. This paper is in nal form and no version of it will be submitted for publication elsewhere. c 2021 The Review of Finance and Banking 135