Productivity Growth in Indian Capital Goods Industry

This paper analyses the partial end total productivity trends in Indian capital goods industry and its three sub-groups viz., non-electrical machinery, electrical machinery and transport equipment. The analysis covering the period 1973-74 to 1987-88 reveals that Indian capital goods industry is going through a process of capital deepening. The continuous decline in capital productivity in all the three sub-groups of capital goods industry together with the continuous increase in labour productivity and capital intensity indicates that capital deepening is yet to reflect in capital efficiency. The negative total productivity growth recorded by non-electrical machinery group in the latest period (1981-82 to 1987-88) calls for increasing the efficiency of resource use, particularly of capital in this sub-group as this sub-group (comprising manufacture of various types of machinery) constitutes the prime mover of Industrial growth in the Indian economy.