Efficiency and Productivity Changes in the Indian Food Processing Industry: Determinants and Policy Implications

Abstract

This paper analyses efficiency and productivity changes in 12 broad segments of food manufacturing industries during pre and post liberalisation periods, covering a period of two decades, from 1980-1981 to 2001-2002. The nonparametric Data Envelopment Analysis (DEA) approach is used to compute the Malmquist Total Factor Productivity (TFP) change, which has been further decomposed into efficiency and technical change. This paper also evaluates the performance of major inputs used in the food processing industry and identifies the causes of inefficiency across various segments. Based on the findings, the paper gives suggestions that can be used by policy makers and food processors in making decisions regarding various technical and managerial aspects to improve productivity and efficiency.

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