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Examining the persistent and transient technical efficiency of the Indian fertilizer industry

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  • Mohd Shadab Danish
  • Pranith Kumar Roy

Abstract

This study examines the persistent and transient technical efficiency of the Indian fertilizer industry using the Stochastic Frontier Analysis (SFA) model developed by Kumbhakar et al. (2014). The firm-level data is obtained from the Centre for Monitoring Indian Economy (CMIE) for the time frame spanning from 2009 to 2019. The results demonstrate a potential scope to enhance technical efficiency, with an average increase of up to 20%. It varies across firms where state-owned enterprises (SOEs) can achieve maximum improvement through continuous efforts to enhance efficiency by restructuring operations. Similarly, leveraging advanced technology and management practices can elevate efficiency by 20% by minimizing transient inefficiency. The result from Tobit regression suggests that private firms (individual and part of conglomerate) are more technically efficient than SOEs. The firms’ age, financial performance, and R&D are positively related to persistent and transient TE. Meanwhile, the size and embodied technology are positive and significant in influencing persistent TE. Private firms with R&D or embodied technology activities have no extra premium of higher TE against the R&D activity of SOEs. It underscores that the effectiveness of innovative activity varies across ownership of the firms due to differences in structure and functioning.

Suggested Citation

  • Mohd Shadab Danish & Pranith Kumar Roy, 2025. "Examining the persistent and transient technical efficiency of the Indian fertilizer industry," Applied Economics, Taylor & Francis Journals, vol. 57(36), pages 5552-5566, August.
    • Handle: RePEc:taf:applec:v:57:y:2025:i:36:p:5552-5566
    DOI: 10.1080/00036846.2024.2364939
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