ABSTRACT
Applying KLEMS production function framework, this study estimates and analyzes the Indian organized manufacturing sector’s growth and productivity performance during 2000–01 to 2009–10. The study undertakes a comparison of TFP growth for three-digit industries to evaluate the Indian manufacturing sector’s productivity performance in detail. It also estimates the relative contribution of TFP growth to output growth in order to examine whether the growth of output has been driven by productivity growth or by input expansion. During the entire study period, output growth of aggregate organized manufacturing is 11.02 percent per annum, while TFP growth rate is 1.65 percent. TFP growth rate for all classified three-digit organized manufacturing industries has been found between -4.21 percent and 6.87 percent. The results of the study also indicate that the average TFP growth contribution to output growth is around 15 percent. Only twelve industries have more than 30 percent TFP contribution. For aggregate manufacturing, we have found that materials alone contributed most of the output growth about 55 percent, followed by services and capital input around 14 and 11 percent, respectively. Contribution of labor and energy inputs are insignificant, respectively contributing 2.38 percent and 2.21 percent to output growth.
