A Comparative Analysis Between Two Parametric Non-Frontier Approaches to the Measurement of Total Factor Productivity Growth for Indian Paper and Paper Products Industry

Abstract

In this study we have examined Total Factor Productivity Growth (TFPG) from two parametric nonfrontier approaches (production function approach and cost function approach) for the Indian paper and paper products industry over the period 1980-81 to 2016-17. We have chosen paper and paper products industry (2-digit level of NIC2008) at all-India level, because, its energy intensity is the highest among the manufacturing industries, according to Annual Survey of Industries (ASI) data. Here, we have considered the most general specification, Trans-log form of production function as well as cost function. Results shows that TFPG declined in the post reform period, highlighting the fact that liberalisation process has its adverse impact on productivity growth. This may be due to decreasing capacity utilisation and fall in the agricultural growth rate in the Indian economy in the liberalised era. Energy intensity of this manufacturing industry is found to be decreasing after liberalization era. But in the absolute amount, it is quite high in the post-reform period compared to other industries. We may think that after liberalization, they have used sophisticated machinery, eco-friendly technology in the production process and hence energy intensity of this industry shows a declining tendency. Decreasing energy intensity, quite significantly, would decrease the level of pollution generated by the manufacturing industry. So, interestingly enough, this may lead us to conclude that the growth of this manufacturing industry is in line with the basic essence of sustainable development.