Artha Vijnana: Journal of The Gokhale Institute of Politics and Economics

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Regional Growth Differentialsin Indian Manufacturing Sector: A Convergence Analysis


Affiliations
1 Mata Ganga Girls College, Tarn Taran 143401, Punjab, India
2 Punjab School of Economics, Guru Nanak Dev University, Amritsar 143005, Punjab, India
     

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The paper examines the efficiency variations as well as the convergence analysis of efficiency levels in Indian manufacturing sector during pre- and post-reforms period spanning from 1980/81 to 2014/15. Using non- parametric approach of data envelopment analysis (DEA), the mean scores of technical efficiency (TE) as well as scale efficiency (SE) have been computed for sixteen major Indian states. Results of the study revealed an average efficiency (inefficiency) to the tune of 76 per cent (24 per cent) in Indian manufacturing sector as a whole. Further, the decomposition analysis of technical inefficiency into pure technical inefficiency (PTE) and scale inefficiency (SE) revealed pure technical inefficiency (also known as managerial inefficiency) as the dominant source of overall technical inefficiency inthese states. In case of convergence analysis, results of the study confirm the presence of convergence during pre-reforms period only, which totally disappeared during the post-reforms period. It implies that the phenomenon of “learning by doing” is almost missing in these manufacturing states. Further, the analysis reveals that the process of economic reforms has failed to render a positive impact to narrow down the inequalities or improving the efficiency of Indian manufacturing sector.
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  • Regional Growth Differentialsin Indian Manufacturing Sector: A Convergence Analysis

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Authors

Neha Arora
Mata Ganga Girls College, Tarn Taran 143401, Punjab, India
Parminder Singh
Punjab School of Economics, Guru Nanak Dev University, Amritsar 143005, Punjab, India

Abstract


The paper examines the efficiency variations as well as the convergence analysis of efficiency levels in Indian manufacturing sector during pre- and post-reforms period spanning from 1980/81 to 2014/15. Using non- parametric approach of data envelopment analysis (DEA), the mean scores of technical efficiency (TE) as well as scale efficiency (SE) have been computed for sixteen major Indian states. Results of the study revealed an average efficiency (inefficiency) to the tune of 76 per cent (24 per cent) in Indian manufacturing sector as a whole. Further, the decomposition analysis of technical inefficiency into pure technical inefficiency (PTE) and scale inefficiency (SE) revealed pure technical inefficiency (also known as managerial inefficiency) as the dominant source of overall technical inefficiency inthese states. In case of convergence analysis, results of the study confirm the presence of convergence during pre-reforms period only, which totally disappeared during the post-reforms period. It implies that the phenomenon of “learning by doing” is almost missing in these manufacturing states. Further, the analysis reveals that the process of economic reforms has failed to render a positive impact to narrow down the inequalities or improving the efficiency of Indian manufacturing sector.

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DOI: https://doi.org/10.21648/arthavij%2F2020%2Fv62%2Fi3%2F203584