Sources of Growth in India: Evidence from Punjab and Haryana

Amarjit Singh Sethi ()
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Amarjit Singh Sethi: Punjab School of Economics, Postal: Punjab School of Economics,, Guru Nanak Dev University,, Amritsar,, Punjab, India

Journal of Regional Development and Planning, 2016, vol. 5, issue 1, 15-34

Abstract: The present analytical study, based on regular time series data (for 30 years period from 1980/81 to 2009/10), aims at analyzing sources of output growth in the states of Punjab and Haryana vis-à-vis the overall Indian economy. Specifically, objective of the paper was to examine whether output growth in these economies has been driven primarily by inspiration or perspiration or by both. For this purpose, output-oriented DEA-based Malmquist Productivity Index approach was adopted with Net Domestic Product as output, and Labour, Capital and Electricity Consumption as three inputs. It was observed that in each of the periods (viz., pre-reforms, post reforms and the overall span), both output growth and TFP growth were the fastest in case of Haryana, followed next by the overall Indian economy. The TFP growth in Punjab continued to remain negative during all the three time spans. In a majority sectors of each of the two states’ economies, TFP growth has failed to pick up its pace during post-reforms vis-à-vis pre-reforms period. Nevertheless, tertiary sector (as also its sub-sectors) of the aggregated Indian economy registered a significant improvement in TFP growth during the reforms period. Further, as per decomposition analysis of the sources of growth, inspiration component has contributed negatively whereas perspiration component has contributed positively to output growth in all the sectors of Punjab. On the other hand, both inspiration and perspiration components have contributed, in general, positively in the Haryana state and the aggregated Indian economy. Nevertheless, growth in factor accumulation has surpassed that in TFP in all the sectors of these economies. Thus, as per the findings, the three economies, in general, and Punjab economy, in particular, need to strive for a productivity-driven economic growth, so as to achieve sustainability in the growth process. As primary sector has fared quite poorly in all the three economies and during all the periods/ sub-periods; therefore, stringent measures (such as consolidation of rural infrastructure, and promotion of agro-based rural industrialization) need be adopted for providing resilience to this sector of crucial importance (providing employment to a large chunk of the population), so as to achieve inclusiveness in the growth process.

Keywords: Growth; Sectoral Impact; Malmquist Productivity Index; DEA; TFP (search for similar items in EconPapers)
JEL-codes: O41 O47 R11 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:ris:jrdpin:0041

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