Issues in measurement of productivity in India

Abstract

A few conceptual issues having direct bearing on deriving the estimates of input productivities at the macro/aggregative level are discussed in the Indian context in the paper. The following issues are discussed in the paper: (a) quality index of labour, (b) time spent on travel by workers to and from workplace, (c) productivity of infrastructural inputs in the user industries, (d) productivity of factor inputs in infrastructural industries, (e) measurement bias of double deflation and single deflation methods for calculating real value added and in measuring the total factor productivity growth. It is argued in the paper that the simple assumption of equality between the wage rate and the marginal productivity of labour which is required for constructing several aggregates isnot likely to be fulfilled in the Indian case on various counts. Similarly, it is also argued in the paper that input productivity estimates may be more reliable at the macro/aggreagative level than at micro/unit level.