Sources of Growth in Punjab and Haryana Economies vs. India: Evidence from Translog Production Function Analysis

Abstract

Using time series data spanning over the period 1980-81 to 2009-10, the present study aims at analysing the sources of growth in Punjab and Haryana states vis-a-vis the overall Indian economy at the aggregated/ disaggregated level. The objective was accomplished through the estimation of translog production function for the three economies at both individual and pooled levels. The analysis was carried out with net domestic product as output, and capital, labour and energy as the three inputs. As per the main findings, output has been more responsive to relative changes in energy consumption (rather than capital and labour) in majority cases, thereby suggestingthe need for more attention to this factor (i.e., energy) for accelerated growth. As far as the rate of technical progress is concerned, Haryana state (as also the overall Indian economy) was observed to have registered positive growth, while Punjab, on the contrary, has experienced a decay. Therefore, concerted efforts need to be made (say, through consolidation of investment on physical and social infrastructure, and R & D) to give a fillip to the rate of technological progress, particularly in the laggard province of Punjab so as to make it keep pace with the other economies. Results from the panel data estimation approach have indicated that rate of acceleration in technical progress was the highest in aggregated tertiary sector, and the lowest in secondary sector which, however, is not a very conducive sign when viewed from the angle of strengthening the production base of the economies. Further, as per computation of the elasticities of substitution, labour could be substituted (in majority sectors) for capital as well as energy to a limited extent. Nevertheless, capital and energy have to be used jointly in the production process, as these happened to be complementary to each other.