This paper makes the case that the growth trajectory of the Indian economy in the post-1991 liberalisation period is characterised by an inherent source of instability in manufacturing and industrial growth that distinguishes this period from the 1980s. This instability is a result of an investment-growth asymmetry that flows from a combination of a services-intensive growth pattern and a manufacturing-intensive investment pattern, which reflects the pattern of demand expansion within the domestic economy as well as in external markets, as also reliance on private corporate investment as the driver of the economy's investment process. In such circumstances, maintaining the balance between capacity creation and demand expansion in the manufacturing sector becomes impossible. Investment is thus prone to a high degree of instability, which, via its effects on demand, makes industrial growth too highly unstable. The services-intensive growth trajectory after 1991 is therefore more correctly viewed as one which is unable to fully utilise the capital accumulation potential of the economy rather than as a trajectory that is cheap in the use of capital. Correcting this problem however requires measures that are inconsistent with a liberalised economic policy regime.