Abstract

The present paper evaluates total factor productivity growth and its determinants for the period of 2009-10 to 2019-20. The paper employs data envelopment analysis based Malmquist Index for calculating TFP growth and panel data models for estimating its determinants. The data were collected from CMIE- PROWESS for the firms that are having sales more than Rs. 100 Crores based on the year 2009-10. The total of 96 firms were used for the analysis and are in terms of rupees in Crores. Total sales, cost of raw materials, salaries and wages, capital cost, and cost of Advertising and marketing are used for calculating TFP. Company age, value of shares, profit, R&D expenditure, value of import and value of exports are used for determinants. It was found that the year 2013-14 recorded positive TFP growth that was mainly due to technological change. It is evident from the result that negative TFP growth is reported in most of the firms during the study period. The main reason for lowest TFP growth is due to technological change in Indian Pharmaceutical firms. Age and export were significant and positive, whereas R&D was a significant and negative relationship with TFP. Rests of the determinants were insignificant with TFP.

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