Manufacturing Sector Productivity in West Bengal across Phases of Liberalisation During 1981- 97

In this paper, the authors study how different policy regimes affected factor productivity growth (partial and total) in the manufacturing sector as a whole in West Bengal during the period 1981-97. First, strong liberalisation (1991-92 to 1997-98) experienced a remarkable positive impact on growth rates of value added, employment and average products of labour and capital. The study has favoured the premise that strong liberalisation programme of 1991 resulted in the growth of labour in excess of capital, leading to a sharp fall in capital-intensity growth. Second, Total Factor Productivity Growth (TFPG) exhibited a rising trend all through the 17-year period starting from 1981. Growth rate of TFPG was the highest during the period of strong liberalisation. But the absolute TFPG figures were indicative of poor industrial performance. Third, technical progress was labour-intensive in nature during the post- 1991 period. Finally, the apprehension that strong liberalisation would result in absolute decline in employment levels in the manufacturing sector seemed unfounded for the manufacturing sector in West Bengal.