Econometric Analysis of Production Functions and Technical Change for Bidi Industry of Madhya Pradesh

Bidi Industry occupies the key place among the small scale forest based cottage industries of Madhya Pradesh. The industry , which is basicaJIy labour intensive , absorbs the highest proportion of workers in total industrial workforce of the State. Bidi industry had the highest proportion of Gross Value Added to the Total Value Added as industrial sector as a whole. Madhya Pradesh has a vast forest area along with Tendu leaves area and is known for its vast Tendu leaves production. The prospects of the Bidi industry in Madhya Pradesh are quite high provided attention is paid to this industry as the close substitute to Bidi are the machine made cigarettes by the large giants like MNCs. The present study aims at finding out the extent of technical change and growth pattern of productivity in the Bidi Industry of Madhya Pradesh with the help of ASI data for the period of 1973-74 to 1992-93. On the basis of results , it can be concluded that labour is the major source of output growth as compared to capital. The time trend coefficient is either found negative or insignificant in most of the cases and suggests inferences in favour of technological retrogression. Thus , it can be concluded that there is a need of review the mechanical , managerial and technological aspects with a view to promote R & D efforts in this industry otherwise this industry will also ride on the same track as the industrial sector of country ps well as State.