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Does the Productivity Growth Numbers Explain the Unbalanced Growth Experience of the Indian Economy?

In: 75 Years of Growth, Development and Productivity in India

Author

Listed:
  • T Thasni

    (Indian Institute of Management Kashipur)

  • Kausik Gangopadhyay

    (Indian Institute of Management Kozhikode)

  • Debasis Mondal

    (Indian Institute of Technology Delhi)

Abstract

We have developed a three-sector dynamic general equilibrium model and calibrated its parameters to align with the output and employment share data of the Indian economy from 1983 to 2012. The model’s output on employment share indicates that the actual labour share in the secondary and tertiary sectors is relatively lower compared to the model-predicted share. To understand the origins of labour productivity growth, we have conducted a shift-share analysis. Our findings reveal that within-sector productivity growth is the most significant contributor to overall growth, and the importance of total factor productivities (TFPs) has increased in the post-economic reform period, particularly after 1991. While the contribution of TFPs in the manufacturing sector has been moderate, our results emphasize the pressing need for reforms to boost the TFP in this sector. In general, the economic reforms implemented in 1991–92 have facilitated a more efficient allocation of productive factors across different sectors of the Indian economy.

Suggested Citation

  • T Thasni & Kausik Gangopadhyay & Debasis Mondal, 2025. "Does the Productivity Growth Numbers Explain the Unbalanced Growth Experience of the Indian Economy?," India Studies in Business and Economics, in: Dibyendu Maiti & Bishwanath Goldar & K.L. Krishna (ed.), 75 Years of Growth, Development and Productivity in India, chapter 0, pages 159-197, Springer.
    • Handle: RePEc:spr:isbchp:978-981-97-8054-9_5
    DOI: 10.1007/978-981-97-8054-9_5
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    Keywords

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    JEL classification:

    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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