You are here

Evaluation of Technical Efficiency in Indian Sugar Industry: An Application of Full Cumulative Data Envelopment Analysis

Journal Name:

Publication Year:

Abstract (2. Language): 
This study focuses on the inter-temporal and inter-state variations in technical and scale efficiency levels of Indian sugar industry. In the first stage, full cumulative data envelopment analysis (FCDEA) is used to derive efficiency scores for 12 major sugar producing states. The panel data truncated regression is employed in the second stage to assess the key factors explaining the observed variations in the efficiency levels. The results suggest that the extent of technical inefficiency in Indian sugar industry is about 35.5 percent per annum, and the observed technical inefficiency stems primarily due to managerial inefficiency rather scale inefficiency. Also, a precipitous decline in the level of technical efficiency has been noticed in the postreforms period relative to the level observed in the pre-reforms period. The availability of skilled labour and profitability have been found to be most significant determinants of technical efficiency in Indian sugar industry.
57-78

JEL Codes:

REFERENCES

References: 

Anthony, N. R., Kostas, T. and Stavros, T. (2009), “Effects of the European Union Farm Credit
Programs on Efficiency and Productivity of the Greek Livestock Sector: A Stochastic DEA
Application”, Paper Presented at the 8th Annual EEFS Conference, “Current Challenges in the
Global Economy: Prospects and Policy Reforms”, 4-7 June 2009, Warsaw: Faculty of
Economic and Science, University of Warsaw. Available at
<>
Avkiran, N.K. (2006), “Productivity Analysis in the Services Sector with Data Envelopment
Analysis”, (3rd Ed.), University of Queensland Business School, The University of Queensland,
Australia.
Banker, R. D., Charnes, A., and Cooper, W.W. (1984), “Some Models for Estimating Technical
and Scale Efficiencies in Data Envelopment Analysis”, Management Science, Vol. 30, No. 9,
pp. 1078-1092.
Brümmer, B. (2001), “Estimating Confidence Intervals for Technical Efficiency: The Case of
Private Farms in Slovenia”, European Review of Agricultural Economics, Vol. 28, No. 3, pp.
285-306.
Charnes, A., Cooper, W.W. and Rhodes, E. (1978), “Measuring the Efficiency of Decision
Making Units”, European Journal of Operational Research, Vol. 2, No. 6, pp. 429-444.
Evaluation of Technical Efficiency in Indian Sugar Industry: An Application of …
Charnes, A., Cooper, W.W., Lewin, A.Y. and Seiford, L.M. (eds.) (1994), “Data Envelopment
Analysis: Theory, Methodology and Applications”, Boston USA: Kluwer Academic Publishers.
Efron, B. and Tibshirani, R.J. (1993), “An Introduction to Bootstrap”, London: Chapman and
Hall.
Ferrantino, M.J. and Ferrier, G.D. (1995), “The Technical Efficiency of Vacuum-Pan Sugar
Industry of India: An Application of a Stochastic Frontier Production Function Using Panel
Data”, European Journal of Operational Research, Vol. 80, No. 3, pp. 639-653.
Ferrantino, M.J., and Ferrier, G.D. (1996), “Best-Practice Technology in an Adverse
Environment: The Case of Indian Sugar, 1981-1986”, Journal of Economic Behaviour and
Organization, Vol. 29, No. 3, pp. 493-522.
Ferrantino, M.J., Ferrier, G.D. and Linvill, C.B. (1995), “Organizational Form of Efficiency:
Evidence from Indian Sugar Manufacturing”, Journal of Comparative Economics, Vol. 21, No.
1, pp. 29-53.
Ferrier, G. D. and Hirschberg, J. G. (1995), “Bootstrapping confidence intervals for linear
programming efficiency scores: with an illustration using Italian banking data”, Journal of
Productivity Analysis, Vol. 8, No. 1, pp. 19-33.
Fethi, M.D. and Jones, T.G.W. (2006), “Stochastic Data Envelopment Analysis”, In Avkiran,
N.K. (Eds.), “Productivity Analysis in the Services Sector with Data Envelopment Analysis”,
(3rd ed.), Australlia: University of Queensland Business School, The University of
Queensland.
Fried, H.O., Lovell, C.A.K., and Schmidt, S.S. (2008), “The measurement of Productive
Efficiency and Productivity Growth”, New York USA: Oxford University Press.
Helvoigt, T. and Adams, D.M. (2008), “Data Envelopment Analysis of Technical Efficiency and
Productivity Growth in the US Pacific Northwest Sawmill Industry”, Canadian Journal for
Research, Vol. 38, No. 1, pp. 2553-2565.
ISMA (2008), “Indian Sugar Year Book: 2003-04”, New Delhi India: Indian Sugar Mills
Association.
Jha, R. and Sahni, B.S. (1993), “Efficiency in the Indian Sugar Industry”, Chapter 13,
“Industrial Efficiency: An Indian Perspective”, New Delhi India: South Asia Books.
Kneip, A., Simar, L., and Wilson, P.W. (2003), “Asymptotic for DEA Estimators in Nonparametric
Frontier Models”, Discussion Paper No. 0317, Belgium: Institute de Statistique,
Universitè Catholique de Louvain, Louvain-la-Neuve.
Kumar, S. (2001), Productivity and Factor Substitution: Theory and Analysis, Deep and Deep
Publications Pvt. Ltd., New Delhi.
Kumar, S. (2003), “Inter-Temporal and Inter-State Comparison of Total Factor Productivity in
Indian Manufacturing Sector: an Integrated Growth Accounting Approach”, ArthaVijnana,
Vol. 45, Nos. 3-4, pp 161-184.
Kumar, S. and Arora, N. (2009a), “Does Inspiration or Perspiration Drive Output Growth in
Manufacturing Sector?: An Experience of Indian States”, The Indian Journal of Economics,
Vol. 89, No. 355, pp. 569-598.
Kumar, S. and Arora, N. (2009b), “Analyzing Regional Variations in Capacity Utilization of
Indian Sugar Industry using Non-parametric Frontier Technique”, Eurasian Journal of
Business & Economics, Vol. 2, No. 4, pp. 1-26. Available at: << www.ejbe.org >>
Sunil KUMAR & Nitin ARORA
Kumbhakar, S. C. and Lovell, C.A.K. (2003), “Stochastic Frontier Analysis”, (2nd ed.), New
York U.S.A.: Cambridge University Press.
Murty, M.N., Kumar, S. and Paul, M. (2006), “Environmental Regulation, Productive
Efficiency and Cost of Pollution Abatement: A Case Study of the Sugar Industry in India”,
Working Paper Number WP213, New Delhi, India: Institute of Economic Growth, Delhi
University Enclave.
Nighiem, H.S., and Coelli, T. (2002), “The Effect of Incentive Reforms Upon Productivity:
Evidences from the Vietnamese Rice Industry”, Journal of Development Studies, Vol. 39, No.
1, pp. 74-93.
Pandey, A.P. (2007), “Indian Sugar Industry-A Strong Industrial Base for Rural India”, MPRA
Paper No. 6065, Available at: << http://mpra.ub.uni-muenchen.de/6065/ >>
Ray S. (2002), “Economic Reforms and Efficiency of Firms: The Indian Manufacturing Sector
During the Nineties”, Institute of Economic Growth, University of Delhi Enclave, Delhi -
110007, India.
Ray, S.C. (1997), “Regional Variation in Productivity Growth in Indian Manufacturing: A
Nonparametric Analysis”, Journal of Quantitative Economics, Vol. 13, No. 1, pp 73-94.
Sanyal, N., Bhagria, R.P. and Ray, S.C. (2008), “Indian Sugar Industry”, YOJANA, Vol. 52, No. 4,
pp. 13-17.
Seiford, L.M. and Thrall, R.M. (1990), “Recent Developments in DEA: The Mathematical
Programming Approach to Frontier Analysis”, Journal of Econometrics, Vol. 46, No. 1-2, pp.
7-38.
Simar, L. (1992), “Estimating Efficiencies from Frontier Models with Panel Data: A
Comparison of Parametric, Non-Parametric and Semi-Parametric Methods with
Bootstrapping”, Journal of Productivity Analysis, Vol. 3, No. 1, pp. 171-203.
Simar, L. and Wilson, P.W. (1998), “Sensitivity Analysis of Efficiency Scores: How to Bootstrap
in Nonparametric Frontier Models”, Management Science, Vol. 44, No. 1, pp. 49-61.
Simar, L. and Wilson, P.W. (1999), “Estimating and Bootstrapping Malmquist Indices”,
European Journal of Operations Research, Vol. 115, No. 3, pp. 459-471.
Simar, L. and Wilson, P.W. (2000a), “Statistical Inference in Nonparametric Frontier Models:
The State of the Art”, Journal of Productivity Analysis, Vol. 13, No. 1, pp. 49-78.
Simar, L. and Wilson, P.W. (2000b), “A General Methodology for Bootstrapping
Nonparametric Frontier Models”, Journal of Applied Statistics, Vol. 27, No. 6, pp. 779-802.
Singh, N.P., Singh, P. and Pal, S. (2007), “Estimation of Economic Efficiency of Sugar Industry
in Uttar Pradesh: A Frontier Production Function Approach”, Indian Journal of Agriculture
Economics, Vol. 62, No. 2, pp. 232-243.
Singh, S.P. (2006a), “Technical and Scale Efficiencies in the Indian Sugar Mills: An Inter-State
Comparison”, Asian Economic Review, Vol. 48, No. 1, pp. 87-99.
Singh, S.P. (2006b), “Efficiency Measurement of Sugar Mills in Uttar Pradesh”, The ICFAI
Journal of Industrial Economics, Vol. 3, No. 3, pp. 22-38.
Singh, S.P. (2007), “Performance of Sugar Mills in Uttar Pradesh by Ownership, Size and
Location”, Prajnan, Vol. 35, No. 4, pp. 333-360.
Solow, R.M. (1957), “Technical Change and Aggregate Production Function”, Review of
Economics and Statistics, Vol. 39, No. 3, pp. 312-320.

Thank you for copying data from http://www.arastirmax.com