Growth, Efficiency & Productivity of Indian Manufacturing Industries: an Econometric Analysis

Considering disaggregated data on Indian manufacturing at two- & three-digit levels, provided by Annual Survey of Industries during 1970-71 to 2001-02, a performance related overview is constructed to observe whether the feat of Indian industries has generated sufficient growth potential in terms of industrial output. A dummy-variable approach is adopted here. The study also focuses on the effects of trade-liberalization policies on output growth process by estimating break points & examining its occurrence & persistence level in pre- or post-liberalization era by employing unit-root hypothesis. For analyzing cost-competitiveness of an industry, measurement of technical efficiency is done by employing Stochastic Frontier Production function approach & extent of total factor productivity growth is examined by non-parametric approach of Data Envelopment Analysis. Inter-industrial variation is observed regarding the explanatory factors responsible for movements of technical efficiency & total factor productivity growth of different industries. The policy prescriptions should focus on the specific broad objectives: whether to endorse efficiency or productivity of a particular industry.