Productivity Growth Decomposition in the Manufacturing Industries of Food, Beverages, and Tobacco Products in India : A Stochastic Frontier Approach

The study applied stochastic production frontier approach to decompose the sources of total factor productivity growth (TFPG) of the organized manufacturing industries of food, beverages, and tobacco products in India into technological progress, changes in technical efficiency, economic scale effect, and allocative efficiency effect during the period from 1981-82 to 2010-11 during the entire period, during the pre- and post-reform period (1981-82 to 1990-91 and 1991-92 to 2010-11), and also, during two decades in the post-reform period (1991-92 to 2000-01 and 2001-02 to 2010-11) at the three-digit level of disaggregation of industries by NIC'04 and NIC'98. According to the estimated results, technological progress and allocative efficiency effect were the major contributors to TFPG of the organized manufacturing industries of food, beverages, and tobacco products in India during the study period from 1981-82 to 2010-11. Further, TFPG of the organized manufacturing industries of food, beverages, and tobacco products in India declined during the post-reform period (1991-92 to 2010-11), which is mainly accounted for by the decline in TP in this period, as our study revealed.