Policy reforms and productivity growth in India's energy intensive industries

India had a highly restrictive industrial and trade policy regime until the end of the 1960s. This regime while succeeding to some extent in creating a diversified industrial base introduced gross inefficiencies in many secto rs of the economy. Beginning in the early 1970s, Indian economic policies h ave been marked by deregulation, decontrol and progressive liberalization. In this paper, we assess the impact of policy reforms on total productivity growth in India's energy intensive sectors: aluminum, cement, fertilizer, iron and steel and paper. Assuming a translog specification of a four input (KLEM) production function, we use growth accounting to decompose the grow th of output into growth of inputs and a residual representing total produc tivity growth. We relate changes in productivity indices to changes in tech nologies, processes and production conditions, which policy reforms helped bring about. A major finding of this paper is that overall productivity gro wth in these industries was quite low during 1973-1994. However, there were significant differences in productivity growth across industries during th is time period. These differences can to a large extent be explained by the nature and timing of policy changes in individual sectors. Published by El sevier Science Ltd.