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Technical Efficiency of Thermal Power Generation in India: Post-Restructuring Experience

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  • Sahba Fatima

    (Discipline of Economics, School of Social Sciences, Indira Gandhi National Open University, New Delhi, India)

  • Kaustuva Barik

    (Discipline of Economics, School of Social Sciences, Indira Gandhi National Open University, New Delhi, India)

Abstract

The Indian power generation industry has undergone a paradigm shift during the past two decades largely due to private sector participation and restructuring of the sector. In order to assess the performance of the power generation sector, the present study takes annual data of 14 major states in India for the period 2000-01 to 2007-08 and estimates a stochastic translog production frontier. The decline in technical efficiency of the Indian power generation sector over the study period, as obtained from the econometric estimation, appears to indicate that it has failed to bring in the desired results in terms of efficiency improvement. The total factor productivity (TFP) of the power generation industry, which includes technical change, technical efficiency change, and scale change, however, has shown some improvement. Technical efficiency of the power generation industry is explained by technical manpower employed, per capita state domestic product, year of unbundling of State Electricity Boards (SEBs) and time variable. The study concludes that inefficiency in Indian power sector is caused by the above mentioned factors rather than stochastic error.

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Bibliographic Info

Article provided by Econjournals in its journal International Journal of Energy Economics and Policy.

Volume (Year): 2 (2012)
Issue (Month): 4 ()
Pages: 210-224

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Handle: RePEc:eco:journ2:2012-04-2

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Related research

Keywords: Stochastic Frontier Analysis; Power Sector Reforms; Total Factor Productivity; India;

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  1. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-32.
  2. Zephyr, 2010. "The city," City, Taylor & Francis Journals, vol. 14(1-2), pages 154-155, February.
  3. Kodde, David A & Palm, Franz C, 1986. "Wald Criteria for Jointly Testing Equality and Inequality Restriction s," Econometrica, Econometric Society, vol. 54(5), pages 1243-48, September.
  4. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
  5. Gopinath Pradhan & Kaustuva Barik, 1999. "Environment-Friendly Behaviour and Competitiveness: A Study of Pulp and Paper Industry in India," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 14(4), pages 481-501, December.
  6. Perkins, Richard, 2005. "Electricity sector restructuring in India: an environmentally beneficial policy?," Energy Policy, Elsevier, vol. 33(4), pages 439-449, March.
  7. Pitt, Mark M. & Lee, Lung-Fei, 1981. "The measurement and sources of technical inefficiency in the Indonesian weaving industry," Journal of Development Economics, Elsevier, vol. 9(1), pages 43-64, August.
  8. K.P. Kalirajan & M.B. Obwona & S. Zhao, 1996. "A Decomposition of Total Factor Productivity Growth: The Case of Chinese Agricultural Growth before and after Reforms," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(2), pages 331-338.
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