Abstract:
The productivity growth has an important linkage with economic growth and
standard of living. It not only increases output but also improves the efficiency level of
firms/industries through better utilization of factors of production, and therefore public
policies aim at improving productivity. This paper focusses on estimating productivity in
iron-steel and cement industries in India and examines the impact of trade liberalization on
productivity. The period of the study is from 1991-92 to 2012-13 which is sub-divided into
two sub-periods; from 1991-92 to 2001-02 and from 2002-03 to 2012-13. Productivity has
been estimated using Malmquist Productivity Index method. The productivity growth in ironsteel and cement industries are 1.4 percent and negative 0.7 percent respectively during the
entire period of the study. It has been found that productivity growth of iron-steel has declined
in sub period-2 from sub period-1, while that of the cement industry has improved a little
during the same period. As far as the impact of trade liberalization measures on productivity
is concerned, it has been found that declined input-tariff, output-tariff and effective rate of
protection and increase trade openness leads to significant increase in productivity. The paper
also concludes the positive impact of increase in construction growth rate and decline in rate
of interest and inflation rate.
