Study of efficiency and productivity growth in opencast and underground coal mining in India: a DEA analysis

Abstract

This paper attempts to study efficiency and productivity of coal mining in the Indian coal sector using detailed input and output data for underground and opencast coal mining for the period between 1985 and 1997. The non-parametric approach of data envelopment analysis (DEA) is adopted for performance analysis of different coal mining regions. Total factor productivity growth was analysed using the Malmquist index by decomposing productivity change into efficiency and technical change. Results of the analysis do not conform to the prevailing notion of opencast (OC) mining having shown more productivity growth than underground mining in India. An increasing percentage of OC mining regions showed a decline in efficiency over the period of analysis. Approximately 58%, 59% and 67% of the mining regions showed decline in productivity between 1985 and 1990, 1990 and 1995 and 1995 and 1997, respectively. Technical progress seems to have been the major driving factor behind productivity growth in opencast mining, while efficiency growth has been the most important factor in growth of underground mine productivity. Underground mines seem to have adopted a more efficient practice of operation to compensate for the lag in technical change. On the other hand, operational efficiency of opencast mines seems to have been overlooked in the process of increasing production through technological improvement in OC mining.