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India KLEMS

Aim of the India-KLEMS Project. To undertake research on India's 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 t

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India KLEMS

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

    2. Aim of the India-KLEMS Project To undertake research on India’s 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.

    3. 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.

    4. 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.

    5. 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

    6. 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.

    7. 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

    8. 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

    9. 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.

    10. 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.

    11. Key findings (2) TFP growth in organized manufacturing is significantly higher than that in unorganized manufacturing

    12. Key findings (3) TFP growth rate in Agriculture and allied activities sector during 1980-2004 was about 0.44% per annum

    13. Thank You

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