Title: Liberalisation and productivity growth: a case of Indian cement industry

Authors: Seema Sharma

Addresses: Department of Management Studies, Vishwakarma Bhawan, Shaheed Jeet Singh Marg, Indian Institute of Technology, New Delhi, India

Abstract: The objective of this paper is to analyse the impact of liberalisation on the productivity performance of the Indian cement industry. Under the growth accounting approach, Divisia Tornquist index has been used to construct the Total Factor Productivity Growth (TFPG) index and the Partial Productivity Indices (PPIs) of four factors of production viz., capital, labour, material and energy. The findings reveal that the Indian cement industry has experienced a sharp decline in the TFP index over a study period from 1989 to 2005. The results on PPIs also corroborate with TFP findings indicating the fact that in the Indian cement industry, the inputs have not been used efficiently. Though the empirical analysis of productivity reveals a dismal state, but at the same time it also indicates that the reversal of this phenomenon can play a crucial role in enhancing the competitiveness of this industry.

Keywords: total factor productivity growth; TFPG; Divisia Tornquist index; partial productivity indices; PPI; India; cement industry; productivity; liberalisation.

DOI: 10.1504/IJPQM.2007.012452

International Journal of Productivity and Quality Management, 2007 Vol.2 No.3, pp.307 - 321

Available online: 14 Feb 2007 *

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