Productivity Change in Indian Manufacturing: A Comparison of Pre Reform and Post Reform Period

Abstract

The economic reforms were initiated in 1991 as part of the structural adjustment programme in India. It constituted of the three-pronged approach of Liberalization, Privatization and Globalization to boost investment, production and productivity in the economy. This paper attempts to analyse the trend of, technical efficiency, technological change and TFP growth in the Indian manufacturing sector during 1981-82 to 2011-12. The period up to 1990-91 is considered as pre-reform while the subsequent period is regarded as post-reform. The data used in this study for calculating productivity and its various components have been sourced from the Annual Survey of Industries (ASI) for the relevant years. The manufacturing sector is modelled as an industry producing a scalar output
measured by the gross value added at constant prices by employing two-factor inputs namely labour and capital. Data Envelopment Analysis based Malmquist Index has been calculated to arrive at the estimates of technical efficiency, technological change and total factor productivity growth and a comparison has been made between pre-reform and post-reform period.