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Fluctuating Total Factor Productivity in India-Evidence from Selected Polluting Industries

Evidence from Selected Polluting Industries Gopinath Pradhan Kaustuva Barik While re-examining the growth path followed by total factor productivity (TFP) in the Indian manufacturing sector, keeping in view the conflicting inferences drawn by recent studies, this paper attempts to take into account some of the theoretical as welt as empirical issues that seem to have been overlooked by the Indian studies. On finding through a statistical test that primary and intermediate inputs are not separable in the production function, the present analysis proceeds with an estimation of TFP on the basis of output in place of the usually preferred variable 'value added1 in the Indian studies. As a fall-out of such a step, the growth recorded by TFP is found to have a positive trend with a marked deceleration during the 1980s, Such a result, therefore, enabled the study to come up with a conclusion that there was no 'turn around' in TFP growth during the 1980s as has been pointed out recently. Extending the TFP estimation to a selected set of industries, identified by the Central Pollution Control Board, New Delhi, to be amongst the most polluting ones, it has been found difficult to substantiate either the claim of a turn around in the growth path of TFP during the 1980s or the option of value added as an appropriate choice for its estimation in the Indian industrial sector. An important finding of the present exercise is one of TFP in India following a fluctuating growth path.

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