“Economic reforms and productivity growth: An inter-state analysis of Indian manufacturing sector”

This paper examines the state-wise trend of total factor productivity (TFP) growth in Indian manufacturing sector for the periods 1975–76 to 2004–05. Tornquist-Divisia index is used to compute total factor productivity index. The resulting information is used to examine whether the post-reform period shows any improvement in productivity in comparison to the pre-reform one. Findings of the present study indicate that total factor productivity growth of Indian manufacturing sector for all states combined and selected states have declined during the post-reforms period as compared to the pre-reforms period. Further, growth of gross value added (GVA) in India and most of the states in the study reveal that there has been decline in growth of GVA during the latter period as compared to the earlier one. It's implying that industrial sector failed to sustain the growth momentum in output during the period after 1991. It is also found that there is a tendency of convergence in terms of TFP growth rate among Indian states during the post-reform years and only the states that were technically efficient at the beginning of the reform remain innovative.