Productivity and effciency of labour intensive manufacturing industries in India An empirical analysis Purna Chandra Parida and Kailash Chandra Pradhan National Institute of Labour Economics Research and Development, Delhi, India Abstract Purpose – This paper aims to make an attempt to identify labour intensity of organized manufacturing industries in India using the Annual Survey of Industry (ASI) data at three-digit level. It estimates total factor productivity growth (TFPG) and technical effciency for both labour intensive and all manufacturing industries during the pre- and post-reforms periods. Design/methodology/approach – The study uses three approaches to estimate TFPG. They are growth accounting (GA) (non-parametric), production function with correction for endogeneity – Levinsohn-Petrin (LP) (semi-parametric) and stochastic production frontier (SPF) analysis (parametric). The study uses ASI data published by Central Statistical Organization, Government of India for the period 1980-1981 to 2007-2008 for the analysis. Findings – The study fnds that the rate of decline of the labour intensity is more pronounced in the case of labour-intensive industries than all the manufacturing industries. The results of GA method suggest that the TFPG of labour-intensive industries has declined continuously from the pre-reforms period to the post-reforms period. Similarly, LP method indicates a continuous decline in TFPG of labour-intensive manufacturing industries during the post-reforms period. Interestingly, the results of SPF method also corroborate the fndings of earlier two methods at the aggregate level but vary at a certain degree at the disaggregated level. Originality/value – This paper is useful in the context of India considering the importance given to labour-intensive industries by the present government in terms of reviving the sector and improving the productivity and output. Keywords Productivity, Effciency, Labour intensity, Manufacturing sector in India Paper type Research paper 1. Introduction Productivity growth holds a critical role in the long-run economic growth of a country. According to the neoclassical growth theory, an economy’s growth is driven by two distinct factors – input and productivity. As far as the frst factor is concerned, higher growth is being achieved through increasing the factors of production. But factors of production are subject to diminishing returns, and certainly the growth rate may not be sustainable in the long run (Young, 1992; Krugman, 1996). The productivity-driven growth or called as total factor productivity (TFP)-driven growth suggests the growth in output less the growth in total inputs. It is also defned as growth of output that is not JEL classifcation – D24, L60, O30 The current issue and full text archive of this journal is available on Emerald Insight at: www.emeraldinsight.com/1446-8956.htm IJDI 15,2 130 International Journal of Development Issues Vol. 15 No. 2, 2016 pp. 130-152 © Emerald Group Publishing Limited 1446-8956 DOI 10.1108/IJDI-12-2015-0081