Abstract
Total Factor Productivity (TFP) measures the growth in output which is not accounted for by inputs. Data Envelopment Analysis which forms the basis for the computation of Malmquist TFP index is used in this paper to study the performance of different river basins in Andhra Pradesh state, India. The results indicated that average technical efficiency of all the basins is only 66%. In all the basins there was a decline in growth of agricultural output during the first two decades, viz., 1979-1980 to 1988-1989 and it had picked in the last decade (1999-2000). All the river basins have TFP change greater than 1 indicating progress in agricultural productivity. Out of the 40 river basins, 14 river basins have technical efficiency change less than 1 indicating decline in TFP growth whereas all the basins have technical changes greater than 1 implying that there is shift in production frontier over years. In general, within the TFP, technical change contributed more than technical efficiency change. Looking at the future options for increasing the agricultural output in the river basins, it is important to focus on improving the TFP growth compared to increasing the quantities of physical inputs.
Highlights
In India, the share of agriculture and allied sectors in total GSDP is declining over years
The results show an annual growth in total factor productivity growth of 2.1 percent, with efficiency change contributing 0.9 percent per year and technical change providing the other 1.2 percent
Godavari basin has higher agricultural output per ha of gross-cropped area compared to Krishna and Pennar basins
Summary
In India, the share of agriculture and allied sectors in total GSDP is declining over years. Studying the agricultural growth of the state using basin-wise data will be more relevant to formulate suitable policies for improving the performance in agricultural sector. Performances of the river basins are studied using various indicators such as area irrigated, area cultivated, water use efficiency, income per unit of water, and so forth, where mostly the inputs use efficiency is focused. It is difficult to relate the performance owing to variety of other issues such as irrigated versus rain-fed area, agriculture versus other benefits (such as livestock), management, technologies, and so forth. Total factor productivity (TFP) approach is obviously a suitable methodology to apply for such multiinput and multioutput technologies
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