Professional Documents
Culture Documents
NUMBER
3
PROJECT NUMBER 3
GROUP
GROUP11
Gaurav Gupta | Milind Aggarwal | Navdeep Sehrawat | Shashank Jain | Simran Singh Vohra
64
76
77
91
95
andtill1980,GDPgrowthinIndiaaveraged
around3.5percent.
The
Note:ThedivisionofmanufacturingintothreesubgroupsisbasedonpercentileofL/kratio
obtained
fromIndiaKLEMSdataset
1990s
1980s
10
2000s
8
5.
7
6
4 3.
4
2
0
1.
0. 8 0.
8
5
-1.5
0.
8 0.
1
-2
1.
0 0.
4
0.
3
3.
8
2. 2. 2.
2 3 0
3.
2. 7
6
-0.3-0.5
1. 1.
1 2
0.
9
2. 2.
7 9
3.
9
1.
2 -0.2 0.
6
0.
5
2008
2011
-2.2 -2.3
-4
1981
1984
1987
1990
1993
1996
GDPgrowth
1999
TFP
Growth
2002
2005
7.38%
7.00
6.00
5.00
1.33
5.35%
1.29
5.86%
1.38
1.56
TFPG
CapitalQuality
4.00
3.00
6.29%
4.22
2.27
CapitalServices
3.23
2.93
LabourPerson
2.00
1.00
0.38
1.47
0.29
0.91
1.30
1.25
1990s
2000s
1980-2011
0.00
1980s
LabourQuality
25%
Density
20%
15%
10%
5%
Average Manufacturing
TFPG=1.6%
0%
-16 -14 -12 -10
-8
-6
-4
-5%
-2
10
Manufacturing
Services
12
14
16
18
8.00
2.69
8.92%
5.93%
2.57
8.21%
1.56
6.00
TFPG
4.00
4.68
5.99
CapitalQuality
5.27
5.27
LabourQuality
2.00
0.00
CapitalServices
LabourPerson
1.19
0.76
0.71
0.88
2000s
1980-2011
-1.37
-2.00
1980s
1990s
1990s
1980s
10
2000s
5
0
-5
-10
-15
1981
1984
1987
1990
1993
1996
Manufacturing
1999
Services
2002
2005
2008
2011
3.07%
3.47%
2.88%
3.00
2.50
1.63
2.23
1.17
3.10%
1.61
CapitalQuality
2.00
LabourQuality
-0.50
1.55
0.91
0.8
0.50
0.00
CapitalServices
0.15
1.50
1.00
TFPG
0.43
0.22
0.18
-0.17
LabourPerson
1.13
1980s1990s2000s1980-2011
In Services, 1990s saw sudden jump in TFP growth but 2000s has
been a decade of capital accumulation
8.79%
9.00
8.00
7.63%
1.71
7.00
6.00
5.00
5.84%
1.7
2.29
TFPG
CapitalQuality
1.23
CapitalServices
5.16
4.00
3.00
7.49%
2.39
3.81
3.55
LabourPerson
2.00
1.00
1.82
0.00
1980s
LabourQuality
0.45
0.38
1.22
1.3
1.45
1990s
2000s
1980-2011
1980s
80
2000s
1990s
60
40
20
0
1980
1983
1986
Totaleconomy
1989
1992
Agriculture
1995
1998
Manufacturing
2001
2004
Nonmanufacturing
2007
2010
Services
1980s
1990s
2000s
50
0
1980
1983
1986
Totaleconomy
1989
1992
Highlabourintensive
1995
1998
2001
MediumLabourIntensive
2004
2007
2010
LowLabourIntensive
Till 2000,Non market services TFP grew faster than total economy
but in 2000s, Market services TFP picked up
1990s
1980s
60
2000s
40
20
0
1980
1983
1986
1989
Totaleconomy
1992
1995
1998
Marketservices
2001
2004
Nonmarketservices
2007
2010
Capital Services
Index:1980=100
1600
1980s
1400
1990s
2000s
1200
1000
800
600
400
200
0
1980
1983
1986
1989
Agriculture
LLI-Manufacturing
NonMarket
Services
1992
1995
1998
HLI-Manufacturing
Non
Manufacturing
2001
2004
2007
MLI-Manufacturing
MarketServices
2010
1980s
600
1990s
2000s
500
400
300
200
100
0
1980
1983
1986
1989
Agricult
ure
LLI-Manufacturing
NonMarket
Services
1992
1995
1998
HLI-Manufacturing
Non
Manufacturing
2001
2004
2007
MLI-Manufacturing
MarketServices
2010
Till almost 2005, labour person grew at faster rate than labour
productivity in the economy. After 2005, Labour productivity growth
has doubled
Total Economy
Index:1980=100
300.0
250.0
200.0
150.0
100.0
50.0
1980s
0.0
1980
1983
1986
2000s
1990s
1989
LabourProductivitygrowth
1992
1995
19982001
LabourShareinGDP
2004
LabourPerson
2007
2010
LabourQuality
Examiningdifferentpolicyregimes
10
5
0
-5
-10
-15
Coke,
Refine
dPetroleum
-30
1
2
ucts
Chemical&chemical
products
produ
15
Post
Post&Telecom
Rubber&P
Rubber&Plastic
Pap
Paper&printing
Textile &leather
TransportEq
Transport uipment
Eq
Hote s&
l
Restaure
3
-25
Manufacturing,nec
-20
-15
-10
-5
0
5
Acceleration in TFPG in 1990s over 1980s
Goodperformerbothin1990s&2000s
Goodperformerin2000sbutbadperformerin
1990s
nts
3
4
10
WorstPerformer
Goodperformeronlyin
1990s
15
LowLI-Manufa cturing
Industry
NonMarketServices
NonMarketServi
MediumLI-Manufacturing
4
3
Agriculture
2.5
Services
HighLI-Manufacturing
2.1
1.8
Agriculture
1.6
MarketServices
NonManufacturing
1
-0.1
0
-1
-2
05
101520253035
40455055606570758085
0
5 10
15 20 25 30 35 40
45 50 55 60 65 70 75 80 85
90
95 100
-3
-4
-3.8
2.8
Industry
MarketServices
2.
2
2.4
Agriculture
Mediu
MediumLI-Manufacturing
Agriculture
Services
1.9
NonManufacturing
HighLI-Manufacturing
1
0
-1
-2
10
15
20
25
30
35
40
45
50
55
60
65
70
75
80
85
-0.6
90
95 1
100
-3
-4
-4.2
-5
LowLI-Manufacturing
6.4
MarketServices
Agriculture
HighLI-Manufacturing
Industry
5
4
3
Services
Agriculture
3.7
2.4
1.2
1
NonMarketServices
0
-1
0 05101520253035
5 10 15 20 25 30 35 4040455055
45 50 5560606570
65 70 75
7
-2
-3
80
-0.7
MediumLI-Manufacturing
NonManufacturing
85
-0.9
90
95100
90951
-2.3
LowLI-Manufacturing
9.0
HighLI-Manufacturing
HighLI
Agriculture
MediumLI-Manufacturing
NonMarketServices
5.9
Industry
Services
5.1
Agriculture
3 .7
MarketServices
3
1.8
2
1
NonManufacturing
0.4
0
-1 0
-2
-3
10
15
20
25
30
35
40
45
50
55
60
65
70
75
80
85
9095100
MediumLI-Manufacturing
NonMarketServices
6.0
Agriculture
5.5
Industry
Services
MarketServices
4.3
4
HighLI-Manufacturing
Agriculture
3.4
LowLI-Manufacturing
2.9
2.4
2
0.9
NonManufacturing
0
0
10
15
20
25
30
35
40
45
50
55
60
65
70
75
80
85
90
95 100
11 10.3
10
MarketServices
Agriculture
Industry
HighLI-Manufacturing
Services
7.7
8
7
MediumLI-Manufacturing
6.2
NonMarketServices
Agriculture
3.8
3.5
3.4
3
2
NonManufacturing
1
0
-1 0
-0.5
10
15
20
25
30
35
40
45
5055
60
65
70
75
80
85
90
95100
-10%
0%
1981-1990
1992-1999
Note:W oodandproductsofwoodshasbeenremovedfromthelistasitwasan
outlier
2000-2011
OtherServices
Education
HealthandSocialWork
PublicAdministrationand
Defence
FinancialIntermediation
PostandTelecom
TransportandStorage
HotelsandRestaurants
Trade
Construction
Utilities
Manufacturing,nec
TransportEqp
ElectricalEqp
Machinery,nec.
BasicMetals
OtherNon-Metallic
RubberandPlasticProducts
ChemicalsandProducts
Coke,RefinedPetroleum
Paper&printing
Textile&leather
FoodProdutcs
Mining
Agriculture
50%
40%
30%
20%
10%
Summing Up
IncreasesinaverageGDPgrowthin2000sisnotaccompaniedbyanincreaseinoverallTFPG,
rathergrowth has been primarily driven by capital accumulation
Whilegrowthofmanufacturingsectorhasbeenquitevolatile,economicgrowthinIndiafollowed
the
pattern of services sector quite well
Policychangesinthe1990sseemstohavehelpedimprovemanufacturingproductivity,though
afteralong period of intensive capital accumulation
TFPgrowthinmanufacturingsectorhasimprovedin2000s,whileinthe1990sfollowingthe
liberalmarketreforms,manufacturinghasseensubstantialcontribution from capital
accumulation.
TFPGinlesslabor intensive sectors picked up in 2000s,wherecapitalservicesalsogrew
quitesubstantiallyinthe1990s.
However,TFPGintheservicessector,ingeneral,has decelerated in the 2000s,comparedto
1990s.
Marketservices,nevertheless,hasshownanimprovementinTFPG
Post and Telecom, Textiles and Transport Equipment areamongthebestperformersin
2000s.
Theliberalmarketreformsinthe1990sseemtohavebenefitted market services in expanding
investment, productivity and growth in the post reform period, whileithelpedaccumulationof
capitalinsomesegmentsofmanufacturingimmediatelyafterthereforms,openinguptoforeign
technologyandimportofcapitalgoodswhichmightbetranslatingintobetterproductivitygainin
thelatterperiod.
Yet,therearesubstantialchallengesahead,as infrastructure and labor market rigidities
still remain asmajorconstraintformanufacturinggrowthinIndia.
Productivity growth
1981-82to1990-91
0.61%
1991-92to1997-98
0.25%
1998-99to2001-02
-0.09%
2002-03to2007-08
1.41%
1.60%
1.40%
1.20%
1.00%
0.80%
0.61%
0.60%
0.40%
0.20%
0.00%
1991-1997
-0.20%
1998-2001
2002-2007
Whydidproductivitygodowninitiallyandthengobackup?
TheabovedataprovidedshowsthatitisaJ-curvepatternslowingdownintheinitialyearsafter
liberalizationbutpickingupsteamafterwards.
REASONS:
Dramatic import liberalization, the balance of payments deterioration and the exchange rate
reform,allofwhichcameasashocktoindustry
Withtheremovalofimportrestrictionsonconsumergoods,certaintypesofcapitalgoodswere
renderedobsolescent,whichledtolowercapacityutilizationinthelate1990sandearly2000s,
andevenlowerproductivity
As firms learned to cope and the benefit of new technologies and products became
widespread,productivityimproveddramaticallyfromthemid-2000s
Agriculture
Industry
Manufacturing
Services
1980
35
25
16
40
1990
29
26
16
44
1995
26
27
17
46
2000
23
26
15
51
2006
18
29
16
53
2010
18
28
15
54
2012
17
26
14
57
CONCLUSION:ManufacturingalwayshadalowshareinGDP.Butwhy?
Asexplainedpreviouslythemanufacturingproductivitydippedfrom0.65%to-0.25%in90s
and1.4%in2000s.Comparedthiswithlowerjobcreationinmanufacturingbecauseofstrict
laborlawsmeantshareofmanufacturinginIndiasGDPnevercrossed17%
APPENDIX
Page39
1980-81 to 1990-91
5.35
3.06
9.18
7.89
9.02
12.36
3.82
5.84
5.35
6.33
1992-93 to 1999-00
5.86
3.47
5.93
4.69
9.89
3.92
3.83
7.62
8.15
6.94
2000-01 to 2011-12
7.38
2.88
8.92
7.79
6.14
13.17
6.73
8.8
10.88
6.2
1980-81 to 20116.3
3.1
8.21
6.99
8.1
10.43
4.98
7.5
8.31
6.44
Page40
1985
Value
Employment
Value
added
31.28
66.92
16.69
8.74
4.63
3.32
9.56
42.47
21.31
21.16
100.00
10.80
8.70
1.23
0.87
3.84
18.44
10.55
7.89
100.00
1995
Value
Employment
added
26.15
17.93
8.29
5.07
4.57
10.06
45.87
26.00
19.87
100.00
63.16
10.67
8.11
1.62
0.94
4.52
21.65
12.67
8.98
100.00
2005
Employment
18.81
15.39
5.99
4.50
4.90
12.75
53.06
30.40
22.66
100.00
55.90
11.21
8.53
1.58
1.09
7.02
25.87
15.72
10.15
100.00
Value Added
Agriculture
Manufacturin
g
1980-81 to
1990-91
12 5.35
Industry
Contribution
0.99
1.53
0.68
0.43
0.42
0.36
2.46
1.12
1.33
1992-93 to
1999-00
2000-01 to
2011-12
1980-81 to
2011-
5.86
7.38
6.3
0.96
0.98
0.36
0.45
0.17
0.39
3.53
2.06
1.47
0.59
1.33
0.47
0.28
0.58
0.82
4.65
3.22
1.43
0.86
1.32
0.52
0.38
0.41
0.55
3.57
2.15
1.42
1.30
0.38
4.22
0.15
1.33
1.25
0.29
3.24
0.14
1.38
Sectors
GVA
Total economy
6.30
Agriculture
3.10
Manufacturing
8.21
High labour intensive 6.99
Medium labour 8.10
Intensive 10.43
Low labour Intensive 4.98
7.50
Non manufacturing
8.31
Services
Market services 6.44
Non market services
Labour
person
1.25
0.13
0.88
0.71
1.17
0.87
3.50
1.45
1.65
1.25
Labour
Quality
0.29
0.12
0.30
0.31
0.28
0.34
0.31
0.38
0.26
0.52
Contribution
Capital
stock
Capital
quality
TFPG
3.24*
1.13*
5.27
4.86
5.42
5.63
3.41
3.81
4.34
3.20
0.14
0.11
0.20
0.13
0.23
0.27
0.08
0.15
0.12
0.18
1.38
1.61
1.56
0.98
1.01
3.33
-2.32
1.70
1.95
1.29
RGVA/Person
Agriculture, Hunting,ForestryandFishing^
1.84
MiningandQuarrying
3.11
Food Products,Beverages andTobacco
3.57
Textiles, Textile Products,Leather andFootwear
2.61
-4.42
WoodandProductsofWood
4.74
Pulp,Paper, Paper Products,PrintingandPublish
5.61
Coke, Refined Petroleum ProductsandNuclear
Fuel
5.93
4.25
Chemicals andChemicalProducts
6.90
RubberandPlasticProducts
1.51
OtherNon-Metallic Mineral Products
3.07
BasicMetals andFabricatedMetal Products
4.97
Machinery,nec
3.87
ElectricalandOpticalEquipment
1.74
TransportEquipment
3.81
Manufacturing,nec;recycling
-2.88
Electricity, GasandWater
1.38
Supply
2.78
Construction
0.73
Trade
0.92
Hotels andRestaurants
3.21
TransportandStorage
4.11
PostandTelecommunication
FinancialIntermediation
PublicAdministrationandDefense;Compulsory
4.59
Social
Health andSocialW
6.02
Education
ork
N o t e : T FPGcomputedusinglabourinput, c a
the r S er vic es
a2s.7a8ninp1.u39t
Page43
TFP
RGVA/Person
TFP
RGVA/Person
TFP
RGVA/Person
TFP
1.63
-1.34
1.03
-1.42
-8.88
1.45
-2.45
5.25
-2.05
-1.08
-1.58
0.52
4.00
0.65
-0.71
1.37
-2.32
0.76
-0.70
1.22
-1.21
2.36
2.69
2.85
5.84
3.37
6.71
-4.19
-0.59
-5.56
7.02
-0.10
6.50
2.78
3.37
1.31
8.86
9.43
8.40
0.40
4.20
6.13
1.97
7.38
7.67
6.32
2.23
2.43
0.66
-0.68
-7.60
-2.46
-13.38
1.72
-5.08
-1.10
-0.77
-1.17
-1.03
0.36
5.61
3.79
-1.19
2.19
5.32
1.75
5.69
1.19
5.50
3.38
2.41
5.68
4.37
1.72
6.21
15.49
7.28
5.24
2.87
4.30
5.57
8.48
2.20
1.18
2.83
-0.11
8.44
5.42
4.66
17.73
4.64
7.33
1.17
-3.36
1.85
1.05
-3.23
3.45
3.47
3.78
0.89
-1.09
-1.25
1.90
4.84
0.34
-1.62
0.83
-2.26
2.57
1.59
1.86
13.91
4.08
5.60
2.73
3.56
4.36
4.41
-1.90
3.91
6.58
6.76
3.49
5.18
2.96
4.15
5.40
4.53
3.57
4.64
-0.89
4.96
4.73
2.63
9.37
4.97
5.99
1.61
-1.14
1.26
-0.23
-6.28
1.21
-3.00
3.72
-1.68
-1.09
-1.23
0.62
2.99
0.45
0.61
1.80
-1.99
1.87
1.82
1.62
6.68
2.74
4.61
0.82
0.91
4.25
3.79
0.07
-0.61
2.09
1.99
-4.55
-5.31
3.50
3.81
-1.53
-1.98
3 .2 8pitalstoc3k.3.5TFPGoft5o.0ta4lecono2m .57yandAgr0i.c8u6lture
inc-l1u.0d4 esland
GVO growth
Labour input
TFPG
Agriculture
2.99
0.18 Capital input
0.83 Intermediate input
0.46
1.52
MiningandQuarrying
5.50
0.88
4.05
1.89
-1.33
7.34
0.26
0.60
5.80
0.68
FoodProductsandbeverages
6.86
0.21
1.37
4.81
0.47
Textiles&LeatherProducts
0.08
0.14
2.25
0.93
-3.23
W oodandProducts
7.41
0.49
0.90
5.24
0.78
Pulp,Paper,paperproducts
8.14
0.05
1.40
6.82
-0.13
Coke,RefinedPetroleum
8.39
0.26
0.83
6.35
0.94
ChemicalsandProducts
9.76
0.40
1.64
7.41
0.31
RubberandPlasticProducts
8.01
0.34
2.49
5.02
0.15
OtherNon-MetallicMineral
7.24
0.21
1.18
6.18
-0.33
ProductsBasicMetalsand
7.81
0.53
1.31
5.10
0.88
FabricatedMetalMachinery,
10.17
0.40
1.11
7.16
1.50
nec.
9.34
0.27
1.24
7.11
0.72
ElectricalandOpticalEqp
10.83
0.53
1.64
7.47
1.19
TransportEquipment
7.08
0.57
1.33
3.70
1.48
Manufacturing,nec
7.07
1.97
0.87
5.95
-1.71
Electricity,GasandW aterSupply
7.67
1.17
3.89
1.17
1.44
Construction
8.50
0.57
1.69
5.47
0.77
Trade
7.30
1.08
1.22
4.85
0.15
HotelsandRestaurants
14.66
1.94
4.19
2.40
6.14
TransportandStorage
10.14
1.94
4.05
1.87
2.28
PostandTelecom
6.11
0.56
0.64
1.62
3.30
FinancialIntermediation
6.76
1.40
6.27
0.61
-1.52
PublicAdministrationandDefense
5.05
0.83
4.10
2.10
-1.99
Education
HealthandSocialW ork
OtherServices
7.211.882.402.01 0.92
Page44
TFP growth(%)
20
15
10
5
0
-5
-10
-15
-20
-15
Totaleconomy
Page45
-10
-5
0
Labour Productvity growth (%)
Agriculture
Manufacturing
Services
10
Non-Manufacturing
15
35
30
25
20
15
10
5
0
-5
-10
-15
-20
-30
-20
Totaleconomy
Page46
-10
0
10
Labour Productivity growth(%)
HLI-Manufacturing
MLI-Manufacturing
20
LLI-Manufacturing
30
20
15
10
5
0
-5
-10
-5
0
Totaleconomy
Page47
5
10
Labour Productivity growth(%)
Services
Marketservices
15
NonMarketServices
20