Historical estimates of productivity growth in India’s cement sector vary from indicating
an improvement to a decline in the sector’s productivity. The variance may be traced to
the time period of study, source of data for analysis, and type of indices and econometric
specifications used for reporting productivity growth. We derive both growth accounting
and econometric estimates of productivity growth for this sector. Our results show that
over the observed period from 1973-74 to 1993-94 productivity increased by 0.8% as
indicated by the Translog index. Calculations of the Kendrick and Solow index support
this finding. The increase was mainly driven by a period of progress between 1983 and
1991 following partial decontrol of the cement sector in 1982. Before 1983, productivity
declined probably due to government protection regarding prices and distribution,
inefficiencies in plant operation and constraints in essential input factors. Between 1991
and 1993, the sector suffered a downfall in accordance with overall economic recession.
Using a translog specification the econometric analysis reveals that technical progress in
India’s cement sector has been biased towards the use of energy and capital, while it has
been material and labor saving. We examine the current changes in structure and energy
efficiency undergoing in the sector. Our analysis shows that the Indian cement sector is
moving towards world-best technology, which will result in fewer carbon emissions and
more efficient energy use. However, substantial further energy savings and carbon
reduction potentials still exist.