Does the Productivity Growth Numbers Explain the Unbalanced Growth Experience of the Indian Economy?

T Thasni (), Kausik Gangopadhyay () and Debasis Mondal ()
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T Thasni: Indian Institute of Management Kashipur
Kausik Gangopadhyay: Indian Institute of Management Kozhikode
Debasis Mondal: Indian Institute of Technology Delhi

Chapter Chapter 5 in 75 Years of Growth, Development and Productivity in India, 2025, pp 159-197 from Springer

Abstract: Abstract We have developed a three-sector dynamic general equilibrium model and calibrated its parameters to align with the output and employment share data of the Indian economy from 1983 to 2012. The model’s output on employment share indicates that the actual labour share in the secondary and tertiary sectors is relatively lower compared to the model-predicted share. To understand the origins of labour productivity growth, we have conducted a shift-share analysis. Our findings reveal that within-sector productivity growth is the most significant contributor to overall growth, and the importance of total factor productivities (TFPs) has increased in the post-economic reform period, particularly after 1991. While the contribution of TFPs in the manufacturing sector has been moderate, our results emphasize the pressing need for reforms to boost the TFP in this sector. In general, the economic reforms implemented in 1991–92 have facilitated a more efficient allocation of productive factors across different sectors of the Indian economy.

Keywords: Agricultural productivity; Structural transformation; Sectoral productivity; Calibration; Multi-sector growth model; General equilibrium (search for similar items in EconPapers)
JEL-codes: C15 C53 C68 O11 O41 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/978-981-97-8054-9_5

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