Studies on total factor productivity growth in Indian
manufacturing that apply the growth accounting
methodology do not distinguish between domestically
sourced and imported intermediate inputs, which could
bias TFP estimates. Using Annual Survey of Industries data,
estimates of TFP growth in Indian manufacturing
industries during 1999–2000 to 2011–12 are presented.
TFP estimation was done by constructing separate series
on domestically procured and imported materials input.
Productivity estimates obtained in the study indicate
that TFP growth in manufacturing industries during
1999–2011 tends to get understated if imported
materials are not separated out from domestically
procured materials. For aggregate manufacturing, TFP
estimates, corrected for aggregation bias, indicate that
there was a rapid growth in productivity.