India KLEMS

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India KLEMS

• Bishwanath Goldar
• Institute of Economic Growth
• Delhi, India
• Research Advisor, India-KLEMS Project

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Aim of the India-KLEMS Project

• To undertake research on Indias productivity
  growth at the economy and sectoral level through
  creation of a database on indicators of economic
  performance
• To generate high quality time series on output
  and inputs in various sectors of the economy
  consistent with the National Accounts
• To create a productivity database for India that
  would be comprehensive and internationally
  comparable.

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Participating Agencies

• The Project is being implemented by the Indian
  Council for Research on International Economic
  Relations (ICRIER) with financial support from
  the Reserve Bank of India (RBI).
• The project is getting data/ research/
  intellectual support from
• Central Statistical Organization (CSO),
  Government of India
• Groningen Growth and Development Center,
  University of Groningen, Netherlands and
• The Conference Board, New York .
• A team comprising members from the RBI and
  experts from the CSO is working closely with the
  ICRIER research team.

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Time Duration and Deliverables

• Time duration of the Project is three years
  2009-10, 2010-11, and 2011-12.
• It has three phases of one year each.
• In each phase, besides constructing data series,
  analytical and policy oriented research papers
  will be produced using the constructed databases
  to focus attention on issues of productivity and
  competitiveness of Indian economy for policy use.
• In addition, a Report and a Data Manual will be
  prepared at the end of each phase.

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Phases of the Project

• Phase I Construction of time series data on
  Value Added, Labour input, and Capital services
  input, and value added based productivity
  estimates for 31 sectors of the economy (covering
  the entire Indian economy)
• Phase II Construction of time series data on
  Gross Output, and Labour, Capital, Materials and
  Energy (KLEM) inputs, and gross output-based
  productivity estimates for 31 sectors of the
  economy
• Phase III 71-industry database for value-added,
  labour input and labour productivity, and
  productivity estimates for 31-sectors using gross
  output-based growth accounting and Labour,
  Capital, Material, Energy and Services (KLEMS) as
  factor inputs

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Coverage and Methodology

• The output, input and productivity series will
  cover the period, 1980 onwards (Current estimates
  cover 1980 to 2004).
• The project will follow, by and large, EU KLEMS
  in regard to sectoral classification, theoretical
  underpinnings of the empirical analysis,
  methodologies and project strategies.

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Improvement on past research

• There have been a lot of research on productivity
  in the Indian economy.
• The project improves on the past productivity
  research on India in following respects
• Comprehensive coverage
• International comparability
• Better theoretical basis for growth accountancy
  inclusion of services input
• More accurate measurement of inputs
  incorporating changes in labour quality, changes
  in the composition of capital assets, and growing
  use of ICT

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How India KLEMS deviates from EU KLEMS?

• India KLEMS differs in two respects
• Manufacturing industries are split into the
  organized (10 worker) and unorganized components
  (below 10 workers)
• Agriculture and allied activities sector which
  employs about half of Indian workers is divided
  into five parts
• Agriculture except plantation and animal
  husbandry
• Plantation
• Animal husbandry
• Forestry
• Fishing

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Progress made so far

• Time series on real value added, labour input
  (quality adjusted), and capital input (adjusted
  for changing composition and use of ICT) have
  been constructed and productivity estimates have
  been made for 31 sectors.
• Manufacturing industries have been split into
  organized and unorganized components and separate
  productivity estimates have been made for these
  two components
• Agriculture and allied activities sector has been
  split into five industries and separate estimates
  of productivity have been made for them.
• Based on the constructed time series on output
  and inputs, and the estimates of productivity,
  three papers have been written. A Report is under
  preparation.

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Key findings (1)

• TFP growth rate in the Indian economy during
  1980-2004 is estimated at 1.3 per annum.
• This is lower than the estimates of Bosworth,
  Collins and Virmani (2006) for 1980-2004 and
  Bosworth and Maertens (2010) for 1980-2006, both
  about 2 per annum .
• The estimate of Jorgenson and Vu (2005) for
  1989-2003 of about 2.3 per annum is also higher.

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Key findings (2)
Per cent per annum
Industry Org. Non-Org.
Food, beverages, tobacco prdts 2.4 -1.7
Textiles, leather, footwear 1.0 -4.5
Chemicals and products 2.7 0.0
Non-electrical machinery 1.2 -2.4

• TFP growth in organized manufacturing is
  significantly higher than that in unorganized
  manufacturing

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Key findings (3)
Per cent per annum
TFP growth LP growth
Agriculture except plantation and animal husbandry 0.40 1.06
Plantation 0.93 -0.08
Animal husbandry 2.80 5.17
Forestry -1.73 -0.79
Fishing -0.08 3.82

• TFP growth rate in Agriculture and allied
  activities sector during 1980-2004 was about
  0.44 per annum

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Thank You