Productivity Growth in Organised Manufacturing Sector in India:Evidence from Technology Intensive Classification of Industries

Abstract

This paper examines the trends in productivity, both labour productivity and Total Factor Productivity (TFP), of organised manufacturing in India. It uses the growth accounting technique based on value added and gross output production framework for assessing the productivity dynamics of 62 industries at the 4-digit level of disaggregation during the period of 1980 to 2007.The study finds a marked shift of industrial composition towards technology and skill intensive production activities. These segments have witnessed considerable growth in labour productivity and total factor productivity, the latter being more pronounced since 2000. Though TFP trend is highly cyclical, there is evidence of a revival in recent period. This suggests that Indian manufacturing has been experiencing sizeable technical change and dynamism of late. However, for a large number of industries, especially the traditional low-technology intensive sectors, the results are sensitive to the method of measuring TFP.