Assessing Technical Efficiency of Sugar Industry in Uttar Pradesh: An Application of Data Envelopment Analysis

Using the data of 86 sugar mills operating in the year 2003-04, this study endeavours to gauge the extent of technical efficiency in the sugar industry of Uttar Pradesh (UP) by employing the technique of data envelopment analysis (DEA). The empirical results reveal that mean overall technical inefficiency (OTIE) is about 19 percent, and both managerial and scale inefficiencies contribute almost equal to observed OTIE. Also, a majority of firms need downsizing in the scale of their operations. The regression results indicate that public ownership adversely affects the operating efficiency of firms, and a weak learning-by-doing effect exists in the sugar industry of UP.