Malmquist indices of productivity change in India's chemical industry: a subsector-level analysis

This paper investigates Total Factor Productivity (TFP) and efficiency growth pattern for India's chemical industry for the period, 1992-1993 to 2007-2008 at subsector level. Malmquist Data Envelopment Analysis (DEA) has been used to estimate different performance measures, viz. productivity growth, technological change and technical efficiency change for the period 1992-1993 to 2007-2008. The result shows that improvement in growth rate of TFP has been explicitly noticed during the entire study period. The industry also experienced progress in technological progress along with stagnation in technical efficiency. The growing technical change along with non-responding technical efficiency change were the main factors responsible for accelerating productivity change in Indian chemical industry. The subsectors of the industry that experienced higher technical progress are man-made fibre, explosive chemicals, photochemical films and fertiliser, etc. The research suggests that the chemical sector must increase TFP by improving both technical efficiency and technological progress.