This paper provides an estimate of the production cost of losses in officia
l working hours and of utilization-adjusted productivity growth using robus
t methods on a panel of industry-region data for Indian manufacturing in th
e 1980s. Time losses such as arise on account of power cuts and materials s
hortages appear to have cost the economy a sixth of its potential manufactu
ring output in 1979. Concomitant with deregulation and increased public inv
estment in infrastructure in the 1980s, there was a significant recuperatio
n of lost time. Although this contributed 25% of the observed acceleration
in output, it has escaped notice so far. Recognizing the increase in factor
utilization produces more modest estimates of productivity growth and cast
s doubt on its sustainability. (C) 1998 Elsevier Science B.V. All rights re
served. JEL classification: O47; C23; D24; E23.