Productivity growth of Indian manufacturing industry

This paper attempts to analyze the partial and total productivity growth of factor inputs of factory sector of 3-digit industry group for whole manufacturing industry in India for the period 1998–99 to 2010–11. The nature of the returns to scale and the elasticity of substitution between the factors of production are also employed. The partial factor productivity of labour is found to be higher than that of capital and substitution of capital for labour was the main feature of the industry over the period. Empirical results also show that the total factor productivity growth of the industry is increasing at a marginal annual average growth rate of 2.77 per cent although there were fluctuations in the indices of total factor productivity over the periods. The industry exhibited increasing returns to scale during the period 1998–99 to 2010–11.