ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Total Factor Productivity Growth in Indian Industry

Total Factor Productivity Growth in Indian Industry Ravindra H Dholakia Bakul H Dholakia IN response to our comment (EPW, December 31, 1994) on the paper by Balkrishnan and Pushpangadan (henceforth BP 1994), the authors have sought a few clarifications on the numbers we have estimated using their data (EPW, March 4, 1995). In their reply [BP 1995] they have also repeated some results already reported in their original paper [BP 1994] and claimed it to be substantial further work which strengthens their finding of no turn-around during the 1980s in the total factor productivity (TFP) growth in the Indian registered manufacturing sector. Moreover, they have ignored and tried to minimise the genuine limitations of the method of double deflation by referring to the ideal conditions which are hardly ever obtained or are practically non-feasible even in the most advanced countries. Here, we would like to provide the necessary clarifications on the method and data used by us to estimate the TFPG in the Indian Registered Manufacturing Sector through the double deflation method; and aIso examine BP'sclaim (1995) of further support to their findings of no turn-around during the 1980s.

Total Factor Productivity Growth in Indian Manufacturing

in Indian Manufacturing Bakul H Dholakia Ravindra H Dholakia IN a recent study. Total Factor Productivity Growth in the Manufacturing Industry in India', Balakrishnan and Pushpangadan (1994, henceforth B-P 1994) have attempted a very interesting exercise. They argue that the estimate of Total Factor Productivity Growth (TFPG) is highly sensitive to the way the real value added is measured. With the help of the example of the growth experience of the manufacturing industry in India, B-P (1994) have tried to show that measurement of real value added by the double deflation method, instead of single deflation method which is more widely used by the researchers, not only alters quantitatively the estimate of TFPG, but also affects qualitative conclusions about the behaviour of TFPG over time. Thus they argue that if double deflation method is used, during the decade of the 80s TFPG does not show any acceleration over the previous period. Rather TFPG during the 70s turns out to be higher than during the 80s. In the present note we would like to show that (1) the qualitative conclusion about the behaviour of TFPG in the Indian manufacturing industry over time, particularly during the 80s as compared to the 70s, does not change if sufficient care is taken about applying the double deflation method; and (2) the double deflation method per se is not necessarily superior to the single deflation method.

Spatial Dimension of Acceleration of Economic-Growth in India

Growth in India Ravindra H Dholakia This study of 20 state economies of India over the period 1960-61 to 1989-90 reveals that the phenomenon of acceleration in economic growth is spatially dispersed and covers about two-thirds of the national economy. The study also finds that most of the states experiencing growth acceleration are relatively less well off. There are marked tendencies for convergence of long-term economic growth rate among Indian states. The growth experience and development strategies differ significantly among states. The leading states also show different patterns of growth. In the Indian industrial sector, the existence of a sharp north-south divide is further corroborated.

Sectoral Targets of the Eighth Plan-Some Implications

The paper examines critically the implications of the sectoral targets of income and employment growth coupled with the investment allocations as envisaged in India's Eighth Five-Year Plan. The implications are worked out on the labour income per unit of investment, required economic rate of return on project investments and the rate of total factor productivity growth by sectors.

Issues in Strategy for Export Promotion-An Inter-Industry Analysis

An Inter-Industry Analysis Ravindra H Dholakia Bakul H Dholakia Ganesh Kumar This article points toward the need for integration between the new Exim policy and the Eighth Plan in India by considering direct and indirect effects of a unit increase in demand for exports as well as forward and backward linkage coefficients in each of the 47 commodity producing sectors using the CSO's latest input-output tables- Its main findings are: (a) if our objective is to achieve diversified high growth in the economy, the agri-based manufacturing sectors may be taken up for intensive export-promotion measures considering their linkages and DI effects; (b) the degree of export orientation of a sector varies inversely with the linkages of the sector with the rest of the economy; and (c) the import intensity of export-oriented sectors is higher than that of other sectors. There is, thus, an urgent need to integrate export promotion measures in our overall development strategy.

IMF s Financial Programming

IMF's Financial Programming Ravindra H Dholakia IN a recent paper, Ranjit Sau [1992] has argued that the IMF's financial programming based on the monetary approach to the balance of payments is incomplete and hence inadequate as a framework for policy formulation. He has tried to show this with the help of a simple static Keynesian macro- economic model and some stray statistical evidence from the Indian economy. There are several weaknesses in his argument. The major ones are as under:

Exemption Limit for Personal Income Taxation

Exemption Limit for Personal Income Taxation NAYAK and Aggarwal (EPW, July 8) have come up with a rudimentary analysis of a very important policy question. The sharp conclusions and unqualified policy recommendation for lowering the existing exemption limit for personal income taxation in India will appear unacceptable to any serious researcher because the study is full of limitations. All these limitations and their probable impact on the sharp conclusions and strong policy recommendations need to be pointed out because the study was supported by (and presumably submitted to) the Central Board of Direct Taxes, 1 propose to point out some of the limitations of the study:

Regional Aspects of Industrialisation in India

The author's examination of data on the industrial sectors of 17 major states over the period 1979-84 brings out very significant regional differences in the pattern and growth of industry. For reduction of regional disparity in industrialisation without sacrificing growth, the study pleads for (i) greater regional spread of individual industries, (ii) diversification of the industrial base of the northern states, and (iii) greater specialisation of the industrial structure in the southern states.

Income-Tax Concessions Implications for Equity and Growth of Tax-Base

Income-Tax Concessions: Implications for Equity and Growth of Tax-Base V N KOTHARI (EPW, February 21) argues that the income tax base in India is being eroded in the name of tax concessions as incentives for savings. On the basis of a broad analysis of the income tax/GDP ratio and some limited hypothetical arguments, he reaches a very serious conclusion that "by extending exemptions to the principal amount invested in particular forms such as the NSC, we have resorted to a costly and inequitous method of borrowing. A full or partial exemption of interest income would have been enough". Considering the profound implications of his conclusions, a detailed scrutiny of his arguments is imperative.

Role of Literacy and Industrial Structure in Displacement of Female Workers

Role of Literacy and Industrial Structure in Displacement of Female Workers Ravindra H Dholakia IN a recent paper, Ghosh and Mukhopadhyay (EPW, November 24, 1984) analyse changes in Female Work Participation Rate (FWPR) during the period 1961 to 1981 and observe that "the main element responsible for worsening of the employment situation for the female was the sex substitution in the work-force as a whole" On the basis of this finding, they appear to conclude that development policies and choice of technologies in India have been such that imbalances have resulted between the two sexes in their statuses, opportunities and potentials for contribution to the development of the country. Although their analysis is interesting, it is not carried out in enough detail to warrant such a conclusion. This is firstly because, their Displacement Effect encompasses both the effects of technology and industrial structure. Secondly, their calculations of different contributions is based on only partial contribution approach and hence cannot be considered unique (See Denison, 1957 and Brown, 1973). Thirdly, they have totally ignored the aspect of literacy which is very important in the context of FWPR. Finally, although they show awareness of the problems of inter- censal comparability of data on workforce, particularly between 1961 and 1971, they have ignored it for all practical purposes.

State Income Inequalities and Inter-State Variations in Growth of Real Capital Stock

Variations in Growth of Real Capital Stock Bakul H Dholakia Ravindra H Dholakia This paper attempts to analyse the behaviour of regional income inequalities and capital inequalities in India. It also seeks to examine the relationship between the trend in regional income inequality and regional allocation of investment among different states.


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