Total Factor Productivity Growth in Indian Crop Sector

Abstract

Growth in agricultural productivity can be due to growth in intensive use of inputs or it may be technology driven. Many studies reported the recent growth on agricultural productivity especially after the year 2004-05. The key question is whether this growth in agricultural productivity will be sustainable? The paper attempts to answer this question based on analysis of total factor productivity growth of the crop sector based on country data during the last 31 years(1980-81 to 2011-12). Tornqvist index methodology has been used for estimation of TFP index for each year. Further, TFP growth has been analysed during four structural breaks. It is observed that annual TFP growth in recovery phase of agriculture, i.e., during 2004-05 to 2011-12 is as high as 5.41. An important contribution of the study is estimation of TFP indices at alternate price scenarios like market price, input price and with exclusion and inclusion of labour wage bill. Further, it is estimated that the contribution of TFP in output growth has been nearly 88 per cent at economic prices. Thus, the paper concludes that recent growth in agriculture is going to be sustainable.