Economic contribution of government department enterprises in India.
| Author | Manonmani, M. |
This study analyzes the productivity and production function in India s manufacturing sector with particular reference to performance of government department enterprises. The data source for the study is Annual Survey of Industries (ASI) of the Central Statistical Organization (CSO), Government of India and covered the period 2001-02/2012-13. Cobb-Douglas production function was applied to measure the productivity ratios and technical progress. Marginal productivity of labor varied between 0.157 units and 8.416 units across the years. These enterprises recorded marginal productivity of capital of 2.1862 units. The average capital intensity ratio was found to be 3.919. Organizational efficiency in the sector was found high.
Introduction
The economic development of a country depends mainly on industrial development. In manufacturing sector, the scope for internal as well as external economies is greater than in the other sectors. The sector acts as an instrument both for creating capacity to absorb excess labor power and for diversifying the market required to boost economic development. Since the early 1990s, the role of the government department enterprises has undergone a rapid change. Integration of the domestic economy with global markets has thrown up a plethora of opportunities and challenges. Some of the enterprises with strategic vision are actively exploring new avenues and have increased their activities to go in for mergers, acquisitions, amalgamations, take over's and creating new joint ventures. The present study attempts to analyze the productivity and production function in India's manufacturing sector with particular reference to the performance of government department enterprises.
Selection of the Variables
Net Value Added (NVA) was taken as output, since trends are not affected significantly by the use of net value added. Also ambiguity in the calculation of depreciation can be overcome if net value added is taken as a measure of output.
Labor input consisted workers directly involved in production while fixed capital was taken into account as capital input. Wages included remuneration paid to workers.
Data Base
The data source of the study was the Annual Survey of Industries (ASI) published by the Central Statistical Organization (CSO), Government of India and covered the period 2001-02/2012-13. All the referred variables were normalized by applying Gross Domestic Product (GDP) deflator. The GDP at current and constant prices were obtained by referring to Economic Survey, published by Government of India, Ministry of...
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