Technical Efficiency in Indian Manufacturing Industry,1981-2001: An Explorative Analysis

Abstract

This paper has explored the technical efficiency levels in five selected manufacturing industries in India utilizing a stochastic frontier approach. In this analysis we have used a panel of 15 Indian States over the 21 years period (1980 -01). Our analysis showed that technical efficiency levels have decreased in four manufacturing sectors in the post reform period and increased only in one. Among the factors that influenced efficiency, man days lost due to industrial dispute has a negative effect while trade openness seems to boost efficiency. The infrastructural parameter such as bank per population has also a favorable effect. On the whole though reforms seemed to have a negative effect on efficiency, it is mostly cluster of other factors that are responsible for this seemingly perverse result.