Ownership Structure and Technical Efficiency: Evidence from the Indian Utility Sector

Shrabana Tripathi ()
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Shrabana Tripathi: Banaras Hindu University Varanasi (U.P.)

SN Operations Research Forum, 2025, vol. 6, issue 1, 1-25

Abstract: Abstract The Indian utility sector is undergoing a transformation in ownership structure, driven by global energy market shifts, technological advancements, evolving government policies, and changing consumer demands. The present study examines the impact of ownership structure on the technical efficiency (TE) of state-owned and private utility firms in India, covering the period from 2004 to 2023. Using stochastic frontier analysis (SFA), the research investigates how factors such as firm size, age, and ownership influence inefficiencies in the sector. The findings reveal that ownership structure plays a significant role in TE, with state-owned firms demonstrating a higher mean technical efficiency of 72%, compared to 63% for private firms. The average technical efficiency across the sector was 58%, indicating a need for overall improvement. To address inefficiencies and meet increasing demand, the study emphasizes the importance of adopting modern technologies, improving management practices, and optimizing resource utilization within utility firms. Additionally, regulatory reforms are essential to streamline processes, encourage competition, and foster innovation. Ultimately, the coexistence of state-owned and private firms is key to creating a competitive and dynamic environment, which will drive sustainable growth and ensure reliable utility services in India.

Keywords: Technical efficiency; Ownership structure; Stochastic frontier analysis; Utility sector; India (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s43069-024-00398-6

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