Total Factor Productivity Growth and Capacity Utilization in Manufacturing Industries in India

Abstract

Structural and economic transformation takes place during the course of economic development. Generally, these changes are associated with the shift in economic activities from agricultural sector towards non-agricultural sectors. It is attributed to the fact that there are bleak prospects of employment after a point in the agricultural sector that ultimately shifts the trajectory of development towards industrialization and services sectors. However, in the Indian context, industrial offtake remained slow. Since 1950-1951, the contribution of industrial sector has doubled only to hover around 28% of GDP. Moreover, it has failed to offer largescale employment to the labor force in the economy. Hence, present study is undertaken to assess the industrial performance and its prospects in future in terms of nature of industries, productivity and capacity utilization since 2000-2001.