Chapter VI TECHNOLOGY AND TECHNICAL PROGRESS IN INDIAN...

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Chapter VI

TECHNOLOGY AND TECHNICAL PROGRESS IN INDIAN TEXTILE

INDUSTRY

6.1 Introduction

Technology and technical progress play a key role in the growth in the output

of a firm or industry and they can be identified as the major determinants of

productivity growth. The present chapter presents makes an attempt to look in to the

technology and technical progress of the textile product manufacturing industry in

India in the pre-liberalization, post liberalization and post-MFA regime.

The term technology can be distinguished from two conceptual points of view

viz., the “stock”, and the “flow”. The technology as “stock” refers to the skills and

knowledge viz., the spectrum of process and techniques available to carry out

economic activity. The flow concept of technological change implies a change in the

body of skills and knowledge and thus refers to the spectrum of change in the process

and techniques of production that underlines factor utilization to carryout economic

activities.

Technical progress refers to the discovery of new and improved methods of

producing goods. Sometimes technological advances result in an increase in the

available supplies of natural resources. However, more generally, technical progress

results in increasing the productivity of labour, capital and other resources. Because

of technological advance, it becomes possible to produce more output with less

resource. According to Solow, ‘technological change is a shorthand expression of any

shift in the production function’. Thus, technological changes cause a shift in the

production function embodying all known techniques.

Tinbergen (1942) and Solow (1957) interpreted TFP growth as disembodied

technical change represented as shifts in an aggregate production function. Solow

(1960) developed a vintage-capital model to incorporate explicitly the changes in the

age distribution of capital stocks and interpreted TFP growth as technical change

embodied in new capital goods. (However, he distinguished disembodied technical

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change raising the productivity of both old and new investment goods without

requiring gross investment, for example managerial and organizational changes).

Brown (1968), developed disembodied technical change as a trend term and

embodied technical change with capital vintage effects, explaining that embodied

technical change could be neutral or non-neutral depending on the elasticity of

substitution between labour and capital. Denison (1962) however argued that

embodied technical change was so insignificant that TFP growth was best interpreted

as disembodied technical change. This prompted Abramovitz (1962) to call for an

urgent examination of the factual gap between these two views. In response to this,

Jorgenson (1966) provided evidence that both embodied and disembodied technical

change have precisely the same factual implications.

Jorgenson (1966) also tried to convince the readers that there was an one-to-

one correspondence between the two types of technical change and, in view of this; it

is concluded that one could not distinguish a given rate of growth in embodied

technical change from the corresponding rate of growth in disembodied technical

change. Although there is some truth in this conclusion, it was based on the simplistic

and easily refutable assumption that the price of investment good was an index of the

quality of investment good.

However in the Indian point of view there are many studies on technical

progress. Pendse et al (1996) made an attempt to study the productivity trends and

technological change in Vanaspati Ghee Industry in Madhyapradesh during the period

from 1973-74 to 1988-89 with reference to ASI data. It is concluded that the

productivity trends and technological change in the industry have experienced capital

deepening process. Shyamala Murthy (1999) examined the Growth, Factor

Productivity, Factor Substitution and Technical Progress in Small-scale textile

Products industry during 1980-1997. The study remarked that performance of small-

scale textile products industry, particularly on the financial point of view was

unsatisfactory. One major ailment affecting this industry is the use of obsolete and

outmoded technology. Gomathi (2001) examined Technology, Technical Progress

and Factor Substitution in small Scale Machinery and Machine Tools manufacturing

industry during 1980-2000. The study also remarked that the marginal product of

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labour was higher than marginal product of capital and capital intensity has increased,

but with a positive contribution to output. Ashok Kumar (2006) studied the impact of

policy shift on technology, technical progress and factor substitution in Indian

Chemical and Chemical Products industry. He concluded that capital saving

technology was found in 4 product groups during pre-liberalization period when

compared to 3 product groups in post-liberalization period.

6.2 Labour Deepening Technical Progress

Technical progress is labour deepening (with constant K/L ratio) if the MRSLK

increases. This implies that the technical progress increases the MPL faster than the

MPK. Thus MRSLK increases if the minus sign is taken into account.

The elasticity of substitution ‘e’ is defined as the ratio of proportionate change

in the ratio of factor inputs to the proportionate change in the ratio of marginal

products.

∆��

��/�

�

��

e = --------------------

∆��/��

Reduction in input with corresponding increase in output will be advantageous to

the company whereas increase in input with corresponding reduction in output will be a

disadvantage.

Theoretically, MRS can be equal to one (=1), greater than (>1), less than one

(<1), greater than zero (>0), and less than zero (<0).

If MRSLK is greater than one (>1) then MPL >MPK

If MRS LK is less than one (<1) MPL < MPK

If MRSLK is equal to one (=1) then MPL = MPK

If MRS = 0 then there is no change in the marginal products.

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If MRS is less than zero, then any one of the marginal product is negative i.e.,

when MPK increases, MPL decreases and vice versa.

6.2.1 Technical Progress based on MRSLK in the Pre-Liberalization Period

Table: 6.1

MRSL K in the Pre-Liberalization Period

(in percentage)

Source: Calculated from ASI data

Table 6.1 presents the details of MRSLK in the pre-liberalization period. It is

clear that MRSLK values are positive in all product groups, which implies that

additional capital and additional labour inputs have contributed positively to output.

Year

NIC

140 1711 1712 1721 1722 1723 1729 1730 1810 Mean

1980-81 0 0 0 0 0 0 0 0 0 0

1981-82 0.00 0.00 0.01 0.57 0.01 0.04 0.07 0.07 0.38 0.13

1982-83 0.01 0.25 0.00 0.06 0.10 0.85 0.46 0.07 0.23 0.23

1983-84 0.00 0.50 1.21 0.08 0.14 0.09 4.63 0.10 0.12 0.76

1984-85 0.02 2.18 0.23 0.18 0.02 0.12 0.13 0.05 0.05 0.33

1985-86 0.02 0.01 0.04 0.69 0.03 5.47 0.01 0.01 0.24 0.72

1986-87 0.29 1.99 0.25 0.02 0.05 0.13 0.22 0.24 0.04 0.36

1987-88 0.01 1.01 0.29 0.00 0.27 0.15 0.90 0.01 0.02 0.24

1988-89 0.33 0.28 0.35 0.04 0.03 4.23 1.50 0.02 0.17 0.77

1989-90 0.04 0.52 0.08 0.68 0.07 0.00 0.21 0.09 0.00 0.19

1990-91 0.03 1.08 0.39 0.09 0.08 0.19 0.57 0.20 0.03 0.30

1991-92 0.19 0.33 0.32 0.42 0.55 0.19 0.24 0.28 0.59 0.35

Mean 0.08 0.68 0.26 0.24 0.07 0.96 0.75 0.10 0.16 0.35

S.D 0.12 0.75 0.33 0.27 0.18 1.85 1.30 0.09 0.18

C.V 153.47 109.95 125.62 116.15 270.39 193.92 174.29 99.71 116.14

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Industry’s average MRSLK in 1981-82 was 0.13 percent. Across the product

groups, maximum of 0.96 is found in the Manufacturing of Making of Blankets,

Shawls, Carpets, Rugs and Other Similar Textiles Products (1723) followed by 0.75

percent in Manufacturing of Embroidery Work, Zari Work and Making ornamental

Trimmings (1729) and minimum of 0.07 percent is found in the Manufacturing of

Making of Blankets, Shawls, Carpets, Rugs and other Similar Textiles Products (1722).

The mean ratio has marginally increased to 0.35 percent in 1991-92, which indicates

fluctuations over the year and increase in MPL.

Across the product groups, the minimum of MRSLK 0.07 percent in

Manufacturing of Making of Blankets, Shawls, Carpets, Rugs and other Similar Textiles

Products (1722) maximum of 0.96 percent is found in Manufacturing of all types of

Threads, Cordage, Ropes, Twines and Nets etc (1723) Intra product group analysis

indicates that the mean MRSLK is less than one in all product groups. The implication

is that in these product groups the MPL is greater than MPK in all product groups,

since MRSLK is less than one. The MRSLK ratios vary widely across different product

groups as evidenced by the co-efficient of variation. The maximum variation of

270.39 percent is found in Manufacturing of Making of Blankets, Shawls, Carpets, Rugs

and other Similar Textiles Products (1722) and the minimum variation of 99.71 percent

was found in Manufacturing of Knitted or Crocheted Textile Products (1730).

The major observations are:

1. MRSLK is positive in all product groups and industry’s mean of MRSLK has

increased marginally over the years.

2. MPK is higher than MPL in all the of the product groups.

3. MRSLK is positive but varies widely across different product groups indicating

differences in the marginal productivity ratios.

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Capital – Labour Ratio in the Pre-Liberalization Period

Capital-Labour ratio of various product groups in the pre-liberalization period

are presented in table-6.2.

Table: 6.2

Capital – Labour Ratio in the Pre-Liberalization Period

(in percentage)

Year

NIC 0140 1711 1712 1721 1722 1723 1729 1730 1810 Mean

1980-81 0.00 0.03 0.03 0.02 0.01 0.03 0.01 0.02 0.01 0.02

1981-82 0.01 0.04 0.03 0.05 0.01 0.04 0.01 0.02 0.01 0.03

1982-83 0.00 0.05 0.04 0.05 0.02 0.06 0.01 0.03 0.02 0.03

1983-84 0.01 0.05 0.04 0.06 0.04 0.06 0.01 0.04 0.01 0.03

1984-85 0.01 0.04 0.04 0.09 0.03 0.03 0.02 0.04 0.01 0.04

1985-86 0.01 0.05 0.04 0.05 0.04 0.05 0.02 0.03 0.02 0.04

1986-87 0.01 0.04 0.06 0.06 0.04 0.04 0.06 0.05 0.02 0.04

1987-88 0.01 0.05 0.07 0.05 0.03 0.06 0.28 0.04 0.02 0.04

1988-89 0.01 0.04 0.04 0.05 0.03 0.04 0.03 0.05 0.04 0.04

1989-90 0.01 0.06 0.04 0.09 0.05 0.04 0.06 0.06 0.04 0.05

1990-91 0.01 0.08 0.06 0.09 0.03 0.07 0.08 0.03 0.04 0.05

1991-92 0.01 0.08 0.05 0.08 0.01 0.03 0.12 0.05 0.05 0.05

Mean 0.01 0.05 0.05 0.06 0.03 0.05 0.06 0.04 0.02 0.04

S.D 0.00 0.01 0.01 0.02 0.01 0.01 0.08 0.01 0.01

C.V 31.60 28.26 25.63 35.27 38.43 30.57 130.13 34.32 57.69


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In 1980-81 the industries mean K/L ratio was 0.02 percent and it has increased

slightly to 0.05 in 1991-92.

The mean ratio for the industry in the pre-liberalization period is 0.04 percent.

Across the product group the maximum of 0.06 percent is found in two product

groups which are the Manufacturing of Embroidery Work, Zari Work and Making

ornamental Trimmings Filling etc (1729) and Manufacturing of Fabrics or Plastic

Sheeting, Manufacture of made up Textile Articles (1721) and the minimum of 0.01

percent is found in Manufacturing of Cotton Ginning, Cleaning and Baling (140).

In order to examine the co-efficient of variations among the product group in the

period of analysis, the higher degree of variations is found in the Manufacturing of

Embroidery Work, Zari Work and Making ornamental Trimmings (1729) with 130.13

percent and minimum variation is observed in the Manufacturing of Bleaching,

Dyeing and Printing of Cotton, Woollen, Silk (1712) with 25.63percent.

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Adjusted MRS at Constant Capital-Labour Ratio in Pre-Liberalization Period

Table 6.3 presents adjusted MRS for constant capital-labour ratio in the pre-

liberalization Period

Table 6.3

Adjusted MRS at Constant Capital-Labour Ratio in the Pre-liberalization

Period

(in percentage)


Year

NIC 0140 1711 1712 1721 1722 1723 1729 1730 1810

Mean

1980-81 0 0 0 0 0 0 0 0 0 0

1981-82 0.67 0.54 0.23 0.53 0.85 0.67 0.06 0.63 0.37 0.64

1982-83 0.23 0.2 0.16 0.01 0.08 0.79 0.45 1.85 0.21 0.51

1983-84 0.34 0.45 1.17 0.02 0.1 0.03 4.62 2.43 0.11 0.91

1984-85 0.45 2.14 0.19 0.09 0.57 0.09 0.11 1.35 0.04 0.61

1985-86 0.01 0.98 0.45 0.64 0.86 5.42 0.48 1.85 0.22 1.17

1986-87 0.28 1.95 0.19 1.41 0.01 0.09 0.16 1.50 7.81 1.48

1987-88 0.46 0.96 0.22 0.66 0.24 0.09 0.62 1.41 0.11 0.52

1988-89 0.32 0.24 0.31 1.69 0.56 4.19 1.47 1.28 3.18 1.40

1989-90 0.03 0.46 0.04 0.58 0.02 0.04 0.15 1.16 0.93 0.35

1990-91 0.02 1.39 0.33 0.72 0.05 0.12 0.49 1.03 3.24 0.81

1991-92 0.18 0.25 0.27 0.57 0.54 0.16 0.12 0.90 5.55 0.94

Mean 0.29 0.84 0.33 0.64 0.32 1.04 0.81 1.35 1.86 0.77

S.D 0.21 0.67 0.29 0.51 0.33 1.81 1.27 0.51 2.56

C.V 71.53 79.71 86.19 79.15 102.71 173.59 157.41 38.08 137.82

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Reduction in input with corresponding increase in output will be advantageous to

the company whereas increase in input with corresponding reduction in output will be a

disadvantage.

Theoretically, MRS can be equal to one (=1), greater than (>1), less than one

(<1), greater than zero (>0), and less than zero (<0).

If MRSLK is greater than one (>1) then MPL >MPK

If MRSLK is less than one (<1) then MPL < MPK

If MRSLK is equal to one (=1) then MPL = MPK

If MRS = 0 then there is no change in the marginal products.

If MRS is less than zero, then any one of the marginal product is negative i.e.,

when MPK increases, MPL decreases and vice versa.

According to Hicks, an invention is said to be neutral when it raises the

marginal productivities of labour and capital in the same proportion. In other words, a

technical change is neutral if the ratio of the marginal product of capital to that of

labour remains unchanged at a constant capital-labour ratio.

To test the above theoretical postulate we have adjusted the MRSLK for

constant capital- labour ratio. Table-6.3 presents the details of adjusted MRS for

constant capital labour ratios. The numerical values of adjusted MRSLK are compared

with the actual MRSLK is given in Table-6.1.

The adjusted MRSLK at a constant capital- labour ratio in the pre-liberalization

period has shown that, the average mean value is 0.77 percent. Across the product

group maximum of 1.86 percent is observed in the Manufacturing of all types of

Textile Garments and Clothing (1810) and minimum of 0.29 percent is found in the

Manufacturing of Cotton Ginning, Cleaning and Baling (0140). The co-efficient of

variations also computed maximum variations of 173.59 percent found in the

Manufacturing of all types of Threads, Cordage, Ropes, Twines and Nets etc (1723)

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and minimum variation is found in the Manufacturing of Manufacture of Knitted or

Crocheted Textile Products. (1730) with 38.08 percent.

It is evident that in most of the product groups, the numerical values of

adjusted MRSLK at a constant capital-labour ratio are found to be different from the

actual MRSLK values. Therefore, the implication is that the technical progress is non-

neutral in majority of the product groups of the industry in the pre-liberalization

period.

Adjusted MPK at Constant Capital-Labour Ratio in the Pre-Liberalization

Period

Table 6.4 presents the adjusted MPk at constant capital – labour ratio in the Pre- liberalization period.

Table 6.4

Adjusted MPK at Constant Capital-Labour Ratio in the Pre-Liberalization

Period

(in percentage) Year

NIC 0140 1711 1712 1721 1722 1723 1729 1730 1810

Mean

1980-81 0 0 0 0 0 0 0 0 0 0

1981-82 0.01 0.64 1.30 0.02 0.60 0.10 0.02 0.15 0.05 0.32

1982-83 0.49 0.09 0.78 0.36 0.05 0.14 0.02 0.10 0.08 0.23

1983-84 0.20 0.20 0.29 0.04 0.11 0.39 0.01 0.18 0.00 0.16

1984-85 0.28 0.06 0.03 0.85 0.60 0.42 0.01 0.40 0.08 0.30

1985-86 0.04 0.25 0.16 0.30 0.12 0.60 0.68 1.36 0.01 0.39

1986-87 0.01 0.07 0.07 0.82 0.01 0.03 0.05 0.07 1.29 0.27

1987-88 0.08 0.12 0.13 12.99 0.12 0.08 0.03 0.63 0.32 1.61

1988-89 0.02 0.02 0.05 0.24 0.05 0.09 0.00 0.78 0.08 0.15

1989-90 0.02 0.23 0.22 0.15 0.14 2.48 0.17 0.23 4.82 0.94

1990-91 0.01 0.05 0.04 0.22 0.07 0.14 0.28 0.00 0.65 0.15

1991-92 0.04 2.40 0.08 2.63 0.07 0.05 0.66 0.06 0.53 0.71

Mean 0.10 0.34 0.24 1.55 0.16 0.38 0.16 0.33 0.66 0.44

S.D 0.15 0.66 0.39 3.64 0.20 0.68 0.25 0.39 1.35

C.V 148.96 191.62 162.61 234.71 125.79 180.28 153.07 118.63 204.58


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Theoretically, a technical change is labour saving if it raises the MPK

relatively to that of labour at a constant capital-labour ratio.

Therefore, to test the above theoretical postulate, we have adjusted MPK for

constant capital-labour ratio. Table-6.4 presents the details of adjusted MPK at

constant capital-labour ratio in the pre-liberalization period.

Adjusted MPL at Constant Capital-Labour Ratio in the Pre-Liberalization

Period

Table 6.5

Adjusted MPL at Constant Capital-Labour Ratio in the Pre-Liberalization Period

(in percentage)


Year

NIC 140 1711 1712 1721 1722 1723 1729 1730 1810

Mean

1980-81 0 0 0 0 0 0 0 0 0 0

1981-82 0.01 0.21 0.99 -0.46 0.34 1.27 0.12 0.11 0.18 0.31

1982-83 0.01 0.70 0.94 -0.02 0.24 1.08 0.01 0.01 0.91 0.43

1983-84 0.03 0.10 0.35 0.93 0.08 0.03 0.04 0.01 1.00 0.29

1984-85 0.00 0.17 0.01 -0.10 0.01 1.10 0.19 0.02 0.84 0.25

1985-86 0.01 0.62 0.01 0.38 0.27 1.95 0.48 0.18 0.13 0.45

1986-87 0.00 0.19 0.01 0.02 0.04 1.45 0.00 0.11 0.46 0.25

1987-88 0.10 0.66 0.03 0.12 0.22 1.84 0.01 0.55 0.01 0.39

1988-89 0.01 0.75 0.03 0.11 0.15 0.56 0.01 0.12 0.01 0.19

1989-90 0.00 0.04 0.02 0.58 0.01 0.01 0.02 0.02 0.02 0.08

1990-91 0.03 0.39 0.01 0.19 0.37 0.02 0.12 0.65 0.02 0.20

1991-92 0.09 0.84 0.03 0.06 0.01 0.02 0.06 0.11 0.04 0.14

Mean 0.02 0.39 0.20 0.15 0.14 0.78 0.09 0.16 0.30 2.23

S.D 0.03 0.30 0.38 0.37 0.14 0.75 0.14 0.22 0.40

C.V 144.66 76.10 188.29 245.23 94.51 97.06 161.11 140.70 133.55

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A technical change is capital saving if it raises the MPL relatively to that of

capital, at a constant capital-labour ratio.

Table-6.5 presents the results of adjusted MPL for constant capital-labour ratio

in the pre-liberalization period. while comparing Tables-6.4 and 6.5 it is found that

the adjusted MPK is greater than the adjusted MPL except in the Manufacturing of

Cotton Spinning, Processing other than in Mills, Weaving and Finishing of Cotton

Textiles (1711) and in the Manufacturing of all types of Threads, Cordage, Ropes,

Twines and Nets etc (1723). The technical progress is labour saving, but in only 2

product groups (1711) and (1723) the adjusted MPK and hence technical progress is

capital saving.

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6.3 Comparative Analysis of Inter Product Group Technology Parameters in the Pre-Liberalization Period

Table 6.6

Comparative Analysis of Inter Product Group Technology Parameters in the Pre-Liberalization Period

NIC Product Groups Labour

Intensity

MPL(%)

Capital

Intensity

MPK(%)

MPL/MPK

=MRSLK

(%)

Technical

Change

Technical Progress

0410 Cotton Ginning, Cleaning and Baling. 0.02 0.1 0.20 Non-neutral

Labour saving

1711

Cotton Spinning, Processing other than in Mills,

Weaving and Finishing of Cotton Textiles on

Handlooms, Powerloom, reparation of Raw Wool, Silk

an Artificial/Synthetic Textile Fibers for Spinning, Jute

and Mesta Pressing and Baling, Coir Fibers, Sannhemp

and other Vegetable Fibers n.e.c.

0.39 0.34 1.15

Non-neutral Capital saving

1712 Bleaching, Dyeing and Printing of Cotton, Woollen,

Silk, Artificial Synthetic, Jute & Mesta and other

Vegetable Fiber Textiles.

0.2 0.24 0.83 Non-neutral Labour saving

1721

Fabrics or Plastic Sheeting, Manufacture of made up

Textile Articles; Except apparel + Manufacture of

Waterproof Textiles Fabrics.

0.15 1.55 0.10 Non-neutral Labour saving

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1722

Making of Blankets, Shawls, Carpets, Rugs and Other Similar Textiles Products and Manufacture of Floor Covering of Jute, Mesta, Sannhemp and other Kindered Fibres and Coir.

0.14 0.16 0.88

Non-neutral Labour saving

1723 Manufacture of all types of Threads, Cordage, Ropes, Twines and Nets etc.

0.78 0.38 2.05 Non-neutral Capital saving

1729 Embroidery Work, Zari Work and Making ornamental

Trimmings and Manufacture of Textile/Textile Products

n.e.c. Like Linoleum, Padding, Wadding Upholstering and

Filling etc.

0.09 0.16 0.56


1730 Manufacture of Knitted or Crocheted Textile Products. 0.16 0.33 0.48 Non-neutral Labour saving

1810 Manufacture of all types of Textile Garments and Clothing

Accessories n.e.c (except by purely tailoring establishments)

from not Self-Produced Material and Manufacture of Rain

Coats, hats, Caps and School Bags etc from Waterproof

Textile.

0.3 0.66 0.45

Non-neutral

Labour saving

133

Table-6.6 presents the comparative analysis of inter product group technology

parameters in the pre-liberalization period. The MRSLK ratios are found to be positive

in all the product groups, which implies that the additional capital and labour inputs

have contributed positively to output. The MRSLK is greater than one in 2 product

groups in the the period. The implication is that in these product groups the MPL is

greater than MPK.

The capital-labour ratios have fluctuated in majority of the product groups. In

the pre-liberalization period, the technical change is non-neutral in all product groups.

The technical progress is labour saving in 7 product groups and capital saving in only

2 product groups.

134

Technical progress in the Post-Liberalization Period

Table 6.7

MRSLK in the Post-Liberalization Period

(in percentage)

Source: Calculated from ASI Data

Table-6.7 shows that MRSLK is a ratio between MPL and MPK. Theoretically,

MRSLK can be positive as well as negative. If MRS is positive, the implication is that both

MPL and MPK are positive and if negative then the marginal products is negative. Negative

marginal productivity implies increase in input with corresponding reduction in output or

vice-versa. In this analysis, the MRSLK is positive in majority of the product groups.

The mean MRSLK for the industry in the post-liberalization period is 0.30

percent. In 1993-94, the mean MRSLK ratio is -0.08 percent and it has fluctuated, in

Year

NIC 0140 1711 1712 1721 1722 1723 1729 1730 1810

Mean

1992-93 0 0 0 0 0 0 0 0 0 0

1993-94 -0.01 2.21 0.73 0.16 -3.50 -1.00 -0.12 0.48 0.33 -0.08

1994-95 -0.17 -2.53 0.07 -0.48 -7.00 0.73 4.50 0.03 0.17 -0.52

1995-96 -0.11 2.10 0.42 -0.83 -0.23 -0.51 -3.50 1.09 -0.01 -0.18

1996-97 -0.02 -0.04 0.13 0.04 0.19 -0.75 0.58 -2.14 -0.44 -0.27

1997-98 0.09 -0.02 -0.50 -0.15 -0.05 -0.01 -0.01 0.23 2.21 0.20

1998-99 -0.15 3.19 -0.10 0.29 -0.07 -0.55 7.81 0.33 -0.23 1.17

1999-00 -0.07 0.25 16.13 0.34 0.05 -0.08 0.11 0.77 4.53 2.45

2000-01 -0.13 0.52 -1.44 -0.05 -0.63 0.03 3.18 0.03 0.16 0.19

2001-02 -0.02 0.65 -3.05 0.30 0.10 15.33 -1.29 -0.23 -0.26 1.28

2002-03 0.04 -0.53 -0.40 -0.04 -0.20 -0.10 -0.22 -0.44 -0.64 -0.28

2003-04 0.39 -0.43 -0.34 -0.08 0.15 0.12 -0.42 0.87 -0.08 0.02

2004-05 -0.03 -1.12 1.24 1.03 -0.21 -2.88 1.40 0.09 0.23 -0.03

Mean -0.01 0.33 0.99 0.04 -0.88 0.80 0.92 0.09 0.46 0.30

S.D 0.14 1.50 4.67 0.44 2.08 4.45 2.84 0.80 1.40

C.V -

1000.56 458.21 470.94 1053.06

-

237.04 559.67 307.28 935.21 305.69

135

the year 2004-05, it was -0.03 percent. In other words, MRSLK is greater than one in 3

product groups implying MPL > MPK. Across the product groups, the maximum of

0.99 percent is found in Manufacturing of Bleaching, Dyeing and Printing of Cotton,

Woollen, Silk (1712) and the minimum of -0.88 percent was recorded in

Manufacturing of Making of Blankets, Shawls, Carpets, Rugs and Other Similar Textiles

(1722).

The MRSLK ratio varying widely across different product groups is evidenced

by the co-efficient of variation. The maximum variation of 1053.06 is found in

Manufacturing of Fabrics or Plastic Sheeting (1721) and the minimum of 237.07 is

found in Manufacturing of Making of Blankets, Shawls, Carpets, Rugs and Other Similar

Textiles Products (1722).

136

Capital-Labour Ratios in the Post-Liberalization Period

Capital-Labour ratios of various product groups in the post-liberalization

period are presented in table-6.8.

In 1992-93 the industry’s mean capital-labour ratio was 0.07 percent and it

has increased to 0.18 percent in 2004-05 and in the post-liberalization period is 0.13

percent. Across the product groups, the maximum of 0.22 is found in Manufacturing

of Embroidery Work, Zari Work and Making ornamental Trimmings (1729) and the

minimum of 0.02 percent is found in Manufacturing of Cotton Ginning, Cleaning and

Baling (140).

Adjusted MRS at constant Capital-Labour Ratio in the Post-Liberalization

Period

Table 6.8

Capital-Labour Ratios in the Post-Liberalization Period

(in percentage)

Year

NIC 0140 1711 1712 1721 1722 1723 1729 1730 1810

Mean

1992-93 0.02 0.10 0.08 0.14 0.09 0.05 0.05 0.06 0.06 0.07

1993-94 0.01 0.12 0.14 0.14 0.69 0.15 0.08 0.12 0.09 0.17

1994-95 0.01 0.18 0.13 0.08 0.04 0.24 0.68 0.10 0.11 0.17

1995-96 0.02 0.20 0.08 0.09 0.09 0.09 0.18 0.14 0.09 0.11

1996-97 0.01 0.17 0.09 0.09 0.09 0.13 0.16 0.11 0.05 0.10

1997-98 0.02 0.19 0.12 0.07 0.11 0.10 0.14 0.12 0.07 0.10

1998-99 0.01 0.14 0.08 0.09 0.08 0.03 0.35 0.10 0.04 0.10

1999-00 0.04 0.14 0.42 0.16 0.07 0.07 0.25 0.24 0.08 0.16

2000-01 0.01 0.10 0.16 0.08 0.18 0.05 0.20 0.23 0.09 0.12

2001-02 0.01 0.08 0.07 0.12 0.15 0.03 0.16 0.10 0.05 0.09

2002-03 0.01 0.12 0.19 0.13 0.19 0.06 0.12 0.14 0.08 0.12

2003-04 0.01 0.14 0.13 0.16 0.18 0.08 0.18 0.22 0.07 0.13

2004-05 0.02 0.21 0.18 0.49 0.12 0.05 0.27 0.18 0.09 0.18

Mean 0.02 0.15 0.14 0.14 0.16 0.09 0.22 0.14 0.07 0.13

S.D 0.01 0.04 0.09 0.11 0.17 0.06 0.16 0.06 0.02

C.V 51.60 27.62 64.63 76.68 103.31 66.94 73.29 40.11 28.05


137

Adjusted MRS at constant Capital-Labour Ratio in the Post-Liberalization Period

Table 6.9

Adjusted MRS at constant Capital-Labour Ratio in the Post-Liberalization Period

(in percentage)

Year

NIC 0140 1711 1712 1721 1722 1723 1729 1730 1810

Mean

1992-93 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

1993-94 2.11 1.27 0.24 2.21 0.05 3.02 0.35 0.78 0.18 1.14

1994-95 2.33 1.26 0.26 2.38 0.05 3.10 0.37 0.83 0.18 1.20

1995-96 2.24 1.25 0.27 2.48 0.05 3.20 0.35 0.82 0.18 1.20

1996-97 2.23 1.27 0.25 2.52 0.05 3.04 0.33 0.76 0.21 1.18

1997-98 2.25 1.20 0.32 2.63 0.06 3.05 0.34 0.75 0.22 1.20

1998-99 2.30 1.22 0.34 2.71 0.06 3.03 0.33 0.73 0.25 1.22

1999-00 2.27 1.23 0.32 2.74 0.06 3.05 0.31 0.70 0.28 1.22

2000-01 2.27 1.29 0.39 2.80 0.06 2.90 0.32 0.66 0.32 1.22

2001-02 2.30 1.33 0.47 3.05 0.07 2.70 0.34 0.68 0.37 1.26

2002-03 2.31 1.35 0.49 3.20 0.07 2.61 0.32 0.68 0.38 1.27

2003-04 2.23 1.26 0.49 3.31 0.08 2.66 0.31 0.67 0.43 1.27

2004-05 2.26 1.25 0.48 3.65 0.08 2.68 0.30 0.70 0.41 1.31

Mean 2.26 1.27 0.37 2.86 0.06 2.90 0.33 0.72 0.30 1.13

S.D 0.61 0.34 0.14 0.88 0.02 0.80 0.09 0.20 0.12

C.V 26.84 26.90 38.39 30.78 31.83 27.61 27.64 27.97 42.23


Table 6.9 presents the details of adjusted MRSLK in the post-liberalization

period. The numerical values of adjusted MRSLK are compared with actual MRSLK

given in table 6.7. It is noted that in most of the product groups, the numerical value

of adjusted MRSLK at a constant capital-labour ratio is found to be different from

actual MRSLK values. The inference is that in the post-liberalization period the

technical progress is non-neutral in majority of the product groups.

138

To identify whether the technical change is labour saving (capital using) or

capital saving (labour using) the study examined the following procedure in the

subsequent section.

Adjusted MPK at constant Capital-Labour Ratio in the Post-Liberalization Period

Table 6.10

Adjusted MPK at Constant Capital-Labour Ratio in the Post-Liberalization Period

(in percentage) Year

NIC 0140 1711 1712 1721 1722 1723 1729 1730 1810

Mean

1992-93 0.44 0.49 0.47 0.48 0.47 0.47 0.48 0.47 0.47 0.52

1993-94 0.58 0.62 0.65 0.92 0.81 0.72 0.76 0.70 0.89 0.80

1994-95 1.94 2.11 2.32 2.01 2.05 2.24 2.08 2.32 2.02 2.32

1995-96 0.24 0.26 0.27 0.33 0.30 0.29 0.30 0.28 0.31 0.31

1996-97 0.60 0.59 0.59 0.63 0.58 0.57 0.57 0.60 0.61 0.66

1997-98 4.58 4.54 4.51 3.96 4.11 4.44 4.51 4.50 4.07 4.74

1998-99 1.03 1.02 1.00 1.02 0.97 0.96 0.98 0.99 1.01 1.11

1999-00 1.53 1.62 1.72 3.01 2.01 2.01 2.17 1.57 2.46 2.16

2000-01 3.65 3.89 4.03 5.02 4.75 4.40 4.55 4.19 4.92 4.77

2001-02 0.47 0.49 0.50 0.42 0.48 0.48 0.48 0.48 0.46 0.53

2002-03 1.21 1.28 1.18 1.15 1.05 1.14 1.11 1.13 1.08 1.30

2003-04 2.21 2.22 2.20 3.07 2.75 2.47 2.65 2.35 2.85 2.77

2004-05 1.90 1.92 1.85 3.92 2.91 2.27 2.68 2.22 3.40 2.77

Mena 1.57 1.62 1.64 2.00 1.79 1.73 1.79 1.67 1.89 1.96

S.D 1.31 1.33 1.35 1.61 1.46 1.42 1.47 1.39 1.53

C.V 83.69 82.30 82.67 80.72 81.93 82.25 82.23 83.06 81.15


139

Theoretically, technical change is labour saving if it raises the MPK relatively

to that of labour at a constant capital-labour ratio. To test the theoretical postulate; the

study adjusted MPK at constant capital-labour ratio. Table-6.10 presents the details of

adjusted MPK at constant capital-labour ratio in the post-liberalization period.

Adjusted MPL at Constant Capital-Labour ratio in the Post-Liberalization period

Table 6.11

Adjusted MPL at Constant Capital-Labour ratio in the Post-Liberalization Period

(in percentage)

Year

NIC 0140 1711 1712

1721 1722 1723 1729 1730 1810

Mean

1992-93 1.08 1.28 1.23 1.45 2.01 1.33 2.21 1.38 2.18 1.41

1993-94 2.11 1.32 2.39 1.65 1.24 1.37 1.40 1.44 1.11 1.37

1994-95 0.98 0.35 1.27 1.89 2.04 2.30 1.36 1.32 2.26 1.32

1995-96 1.11 2.29 3.21 0.67 0.71 1.28 0.30 1.40 0.46 1.19

1996-97 0.90 1.29 1.20 1.12 0.86 0.32 1.46 0.48 0.84 0.82

1997-98 1.83 0.31 3.22 1.23 1.37 1.28 1.29 1.30 1.32 1.32

1998-99 0.89 2.29 1.27 1.45 1.51 1.16 1.67 1.39 1.53 1.30

1999-00 3.12 2.39 1.58 1.67 1.49 1.58 0.46 1.70 1.05 1.49

2000-01 2.09 3.46 1.38 0.89 0.40 1.23 1.03 0.78 0.04 1.16

2001-02 1.11 3.43 1.28 1.15 1.28 1.28 1.57 1.41 1.17 1.39

2002-03 1.10 1.49 1.41 1.56 0.98 1.40 0.58 1.56 0.90 1.05

2003-04 2.12 1.47 1.45 1.08 1.18 1.34 1.80 0.58 1.10 1.23

2004-05 2.26 1.51 1.50 0.22 0.17 0.29 2.75 1.45 2.15 1.34

Mean 1.59 1.76 1.72 1.23 1.17 1.24 1.38 1.25 1.24 1.26

S.D 0.70 0.98 0.73 0.47 0.55 0.50 0.69 0.38 0.66

C.V 44.19 55.85 42.29 37.12 47.24 40.50 49.95 30.42 53.45


140

A technical change is capital saving if it raises the MPL relatively to that of

capital, at constant capital-labour ratio. The given output will require less capital

relatively to labour.

Table-6.11 presents the results of adjusted MPL at constant capital-labour ratio

in the pre-liberalization period. Tables-6.10 and 6.11 found that the adjusted MPK is

greater than the adjusted MPL in all product groups. The technical progress is labour

saving and in only 2 product groups the technical progress is capital saving, because

for these product groups, the adjusted MPL is greater than the adjusted MPK.

141

6.4 Comparative Analysis of Inter Product Group Technology Parameters in the Post-Liberalization Period

Table 6.12

Comparative Analysis of Inter Product Group Technology Parameters in the Post-Liberalization Period


Intensity

MPL(%)

Capital

Intensity

MPK (%)

MPL/MPK

=MRSLK

(%)

Technical

Change

Technical

Progress

0410 Cotton Ginning, Cleaning and Baling. 1.59 1.57 1.01

Non-neutral

Capital saving

1711

Cotton Spinning, Processing other than in Mills, Weaving and Finishing of Cotton Textiles on Handlooms, Powerloom, reparation of Raw Wool, Silk an Artificial/Synthetic Textile Fibers for Spinning, Jute and Mesta Pressing and Baling, Coir Fibers, Sannhemp and other Vegetable Fibers n.e.c.


1712 Bleaching, Dyeing and Printing of Cotton, Woollen, Silk, Artificial Synthetic, Jute & Mesta and other Vegetable Fiber Textiles.


1721 Fabrics or Plastic Sheeting, Manufacture of made up Textile Articles; Except apparel + Manufacture of Waterproof Textiles Fabrics.

1.23

2

0.62

Non-neutral

Labour saving

142

1722


1.17 1.79 0.65


1723 Manufacture of all types of Threads, Cordage, Ropes, Twines and Nets etc. 1.24 1.73 0.72


1729 Embroidery Work, Zari Work and Making ornamental Trimmings and Manufacture of Textile/Textile Products n.e.c. Like Linoleum, Padding, Wadding Upholstering and Filling etc. 1.38 1.79 0.77


1730 Manufacture of Knitted or Crocheted Textile Products. 1.25 1.67 0.75


1810 Manufacture of all types of Textile Garments and Clothing Accessories n.e.c (except by purely tailoring establishments) from not Self-Produced Material and Manufacture of Rain Coats, hats, Caps and School Bags etc from Waterproof Textile. 1.24 1.89 0.66


143

Table 6.12 presents the comparative analysis of inter product group technical

parameters in the post-liberalization period. The MRSLK in post-liberalization period

was positive, which implies that the additional capital and labour inputs have

contributed positively to output.

The technical change is non-neutral in all product groups. In the post-

liberalization period, the technical progress was labour saving in 6 product groups

and capital saving in 3 product groups.

Technical Progress in the Post-MFA Regime

Technical Progress based on MRS in the Post--MFA Regime

Table-6.13 shows that MRSLK is a ratio between MPL and MPK. Theoretically,

MRSLK can be both positive and negative. If MRS is positive, the implication it implies

that both MPL and MPK are positive and if it is negative then anyone of the marginal

products is negative. Negative marginal productivity implies increase in input with

corresponding reduction in output and vice-versa. In this analysis, the MRSLK is positive in

7 product groups.

Table 6.13

MRSLK in the Post-MFA regime

(in percentage)

Year

NIC 0140 1711 1712 1721 1722 1723 1729 1730

1810 Mean

2005-06 0 0 0 0 0 0 0 0 0 0

2006-07 -0.09 -0.74 0.68 0.29 1.92 0.11 1.92 0.49 0.25 0.54

2007-08 -0.06 -0.57 0.62 0.28 1.81 0.09 2.02 0.49 0.25 1.00

2008-09 -0.13 -1.07 0.88 0.36 2.62 0.14 2.70 0.63 0.31 0.71

2009-10 0.01 -4.23 1.70 1.11 -0.77 0.21 3.54 1.13 0.35 2.00

Mean -0.05 -1.32 0.78 0.41 1.12 0.11 2.04 0.55 0.23 0.85

S.D 0.06 1.67 0.61 0.42 1.43 0.08 1.31 0.40 0.14

C.V

-106.84 -126.38 78.92 102.03 127.94 68.83 64.27 73.45 58.90

144

The MRSLK for the industry in the post-MFA period was 0.85 percent. In

2006-07 the mean of MRSLK ratio is 0.54 percent and it has fluctuated over the years

and it is 2.00 percent in 2009-10. In other words, MRSLK is greater than one in one

product group implying MPL > MPK. Across the product groups, the maximum of

2.04 percent is found in Embroidery Work, Zari Work and Making ornamental

Trimmings and Manufacture of Textile/Textile Products (1729) and the minimum of -

1.32 percent is recorded in Manufacturing of Cotton Spinning, Processing other than in

Mills, Weaving and Finishing of Cotton Textiles (1711)

The MRSLK ratios vary widely across different product groups is evident from

the co-efficient of variation. The maximum variation of 127.94 is found in

Manufacturing of Making of Blankets, Shawls, Carpets, Rugs and Other Similar Textiles

Products (1722) and the minimum variation -126.38 is found in Manufacturing of

Cotton Spinning, Processing other than in Mills, Weaving and Finishing of Cotton

Textiles (1711)

Capital-Labour Ratios in the Post-MFA Regime

Table 6.14

Capital-Labour Ratios in the Post-MFA Regime

(in percentage)

Year

NIC

0140 1711 1712 1721 1722 1723 1729 1730 1810

Mean

2005-06 0.02 0.27 0.20 0.12 0.13 0.10 0.49 0.19 0.16 0.19

2006-07 0.02 0.26 0.24 0.21 0.24 0.09 0.61 0.29 0.16 0.24

2007-08 0.03 0.28 0.25 0.21 0.26 0.09 0.69 0.31 0.17 0.25

2008-09 0.03 0.30 0.27 0.23 0.29 0.09 0.80 0.34 0.19 0.28

2009-10 0.02 0.27 0.21 0.23 0.24 0.07 0.51 0.23 0.11 0.21

Mena 0.03 0.28 0.23 0.20 0.23 0.09 0.62 0.27 0.16 0.23

S.D 0.00 0.02 0.03 0.04 0.06 0.01 0.13 0.06 0.03

C.V 5.07 5.65 11.43 22.06 26.85 12.73 20.40 22.90 17.42


145

Capital-Labour ratios of various product groups in the post-MFA are

presented in table-6.14. In 2005-06, the industries mean capital-labour ratio was 0.19

percent and it has fluctuated and increased to 0.21 percent in 2009-10. Among the

product groups maximum of 0.62 percent is found in Manufacturing of Embroidery

Work, Zari Work and Making ornamental Trimmings (1729) and minimum of 0.03

percent is found in Manufacturing of Cotton Ginning, Cleaning and Baling (0140)

Adjusted MRS at Constant Capital-Labour Ratio in the Post-MFA Regime

According to Hicks, an invention is said to be neutral when it raises the

marginal productivities of labour and capital in the same proportion. In other words, a

technical change is neutral if the ratio of the marginal product of capital to that of

labour remains unchanged at a constant capital-labour ratio.

To test the above theoretical postulate we have adjusted the MRSLK at

constant capital-labour ratio. Table-6.15 presents the details of adjusted MRS at

constant capital-labour ratio ratios. The numerical values of adjusted MRSLK were

compared with the actual MRSLK values presented. It is evident that in most of the

product groups, the numerical values of adjusted MRSLK at a constant capital-labour

ratio are found to be different from the actual MRSLK values. Therefore, the

implication is that the technical progress is non-neutral in majority of the product

groups of this industry in the post-MFA regime.

146

Table 6.15

Adjusted MRS at Constant Capital-Labour Ratio in the Post-MFA Regime

(in percentage)

Year

NIC 0140 1711 1712 1721 1722 1723 1729 1730 1810

Mean

S.D

C.V

2005-06 0.42 0.47 0.52 0.50 0.51 0.49 0.50 0.50 0.50 0.49 0.03 5.60

2006-07 0.15 0.16 0.17 0.24 0.21 0.19 0.20 0.18 0.22 0.19 0.03 15.59

2007-08 0.17 0.19 0.20 0.19 0.20 0.22 0.22 0.22 0.20 0.20 0.02 8.77

2008-09 0.17 0.20 0.21 0.25 0.24 0.22 0.23 0.22 0.24 0.22 0.03 11.52

2009-10 0.43 0.43 0.42 0.43 0.41 0.43 0.40 0.42 0.41 0.42 0.01 2.55

Mean 0.27 0.29 0.30 0.32 0.31 0.31 0.31 0.31 0.31 0.30

S.D 0.15 0.15 0.15 0.13 0.14 0.14 0.13 0.14 0.13

C.V 54.26 51.35 50.77 41.61 44.05 44.41 43.36 46.06 42.58


147

Adjusted MPK at Constant Capital-Labour Ratio in the Post-MFA regime

Table 6.16

Adjusted MPK at Constant Capital-Labour Ratio in the Post-MFA Regime

(in percentage)

Year

NIC 140 1711 1712 1721 1722 1723 1729 1730 1810

Mean

S.D

C.V

2005-06 0.07 0.07 0.07 0.07 0.06 0.07 0.06 0.07 0.06 0.07 0.00 2.60

2006-07 0.30 0.34 0.36 0.54 0.48 0.35 0.44 0.38 0.44 0.40 0.08 19.22

2007-08 0.36 0.38 0.40 0.51 0.47 0.43 0.46 0.42 0.49 0.44 0.05 11.58

2008-09 0.73 0.72 0.74 0.69 0.72 0.72 0.72 0.76 0.72 0.72 0.02 2.59

2009-10 0.35 0.30 0.31 0.27 0.27 0.28 0.28 0.29 0.26 0.29 0.03 9.97

Mean 0.36 0.36 0.38 0.41 0.40 0.37 0.39 0.38 0.40 0.38

S.D 0.24 0.23 0.24 0.25 0.25 0.24 0.24 0.25 0.25

C.V 65.06 64.80 63.80 59.52 61.24 65.09 61.91 65.62 62.96


148

Adjusted MPL at Constant Capital-Labour Ratio in the Post-MFA regime

Table 6.17

Adjusted MPL at Constant Capital-Labour Ratio in the Post-MFA Regime

(in percentage)

Year

NIC 140 1711 1712 1721 1722 1723 1729 1730 1810

Mean

S.D

C.V

2005-06 0.26 0.40 0.50 0.45 0.36 0.42 0.39 0.41 0.41 0.40 0.07 16.70

2006-07 0.42 0.04 0.04 0.05 0.05 0.48 0.05 0.05 0.51 0.19 0.21 113.40

2007-08 0.33 0.37 0.36 0.31 0.33 0.37 0.35 0.37 0.31 0.34 0.03 7.78

2008-09 0.88 0.07 0.07 0.10 0.09 0.81 0.08 0.08 0.93 0.34 0.40 115.84

2009-10 0.97 0.19 0.21 0.93 0.81 0.46 0.66 0.28 0.86 0.59 0.32 53.18

Mean 0.57 0.21 0.24 0.37 0.33 0.51 0.31 0.24 0.60 0.37

S.D 0.33 0.17 0.20 0.35 0.30 0.17 0.25 0.17 0.28

C.V 57.62 78.76 83.14 96.28 92.11 34.21 82.08 70.64 45.72


Theoretically a technical change is labour saving, if it raises the MPK

relatively to that of labour at a constant K/L ratio. On the other hand, a technical

change is capital saving, if it raises the MPL relatively to that of capital. The given

output will require less capital relatively to labour.

149

To test this theoretical postulate, the study adjusted both MPK and MPL at

constant capital-labour ratio and details are presented in tables-6.16 and 6.17.On

comparison, it is found that the technical progress in 3 product groups is labour using

or capital saving, because the adjusted MPL at constant capital-labour ratio is greater

than the adjusted MPK and in 9 product groups the technical progress is capital using

or labour saving technology because in these product groups the adjusted MPK at

constant capital-labour ratio is greater than the adjusted MPL.

150

6.5 Comparative Analysis of Inter Product Group Technology Parameters in the Post-MFA Regime

Table 6.18

Comparative Analysis of Inter Product Group Technology Parameters in the Post-MFA Regime


Intensity

MPL(%)

Capital

Intensity

MPK (%)

MPL/MPK

=MRSLK (%)

Technical

Change

Technical

Progress

0410 Cotton Ginning, Cleaning and Baling. 0.57 0.36 1.58 Non-neutral

Capital saving

1711

Cotton Spinning, Processing other than in Mills, Weaving and Finishing of Cotton Textiles on Handlooms, Powerloom, reparation of Raw Wool, Silk an Artificial/Synthetic Textile Fibers for Spinning, Jute and Mesta Pressing and Baling, Coir Fibers, Sannhemp and other Vegetable Fibers n.e.c.

0.21 0.36 0.58 Non-neutral

Labour saving

1712 Bleaching, Dyeing and Printing of Cotton, Woollen, Silk, Artificial Synthetic, Jute & Mesta and other Vegetable Fiber Textiles.

0.24 0.38 0.63 Non-neutral

Labour saving

1721 Fabrics or Plastic Sheeting, Manufacture of made up Textile Articles; Except apparel + Manufacture of Waterproof Textiles Fabrics.

0.37 0.41 0.90 Non-neutral

Labour saving

151

1722


0.33 0.4 0.83 Non-neutral

Labour saving

1723 Manufacture of all types of Threads, Cordage, Ropes, Twines and Nets etc.


1729 Embroidery Work, Zari Work and Making ornamental Trimmings and Manufacture of Textile/Textile Products n.e.c. Like Linoleum, Padding, Wadding Upholstering and Filling etc.

0.31 0.39 0.79 Non-neutral

Labour saving

1730 Manufacture of Knitted or Crocheted Textile Products.

0.24 0.38 0.63 Non-neutral

Labour saving

1810 Manufacture of all types of Textile Garments and Clothing Accessories n.e.c (except by purely tailoring establishments) from not Self-Produced Material and Manufacture of Rain Coats, hats, Caps and School Bags etc from Waterproof Textile.


152

Table 6.18 presents the comparative analysis of inter product group

technology parameters in the post-MFA period. The MRSLK in the post-MFA regime

is positive, which implies that the additional capital and labour inputs have

contributed positively to output.

The technical change is non-neutral in all product groups. In the post-

liberalization the technical progress is labour saving in 6 product groups and capital

saving in 3 product groups.

153

6.6 Technology Parameters: Pre- Liberalization Period, Post- Liberalization

Period and Post-MFA Regime

Table 6.19

Technology Parameters: Pre- Liberalization, Post Liberalization Period and

Post-MFA Regime

Sl.

No Parameters

Pre-

liberalization

Post-

liberalization

Post- MFA

regime

Mean (%) Mean (%) Mean (%)

1.

2.

3.

4.

5.

6.

7.

8.

MRSLK

K/L ratio

Adjusted MRSLK

Adjusted MPK

Adjusted MPL

Technical

progress

Nature of

Technology:

Capital saving

Labour saving

0.35

0.04

0.77

0.44

2.23

Non-neutral

2

7

0.30

0.13

1.13

1.96

1.26

Non-neutral

3

6

0.85

0.23

0.30

0.38

0.37

Non-neutral

3

6

154

Table-6.19 presents the technology parameters in the pre and post

liberalization and post-MFA regime. In terms of absolute (mean) values, factor

productivities except adjusted marginal productivity of labour (MPL) labour intensity

is higher in the post liberalization period.

Industry’s mean MRSL,K ratio is positive and less than one in the both pre –

liberalization, post-liberalization and post MFA periods, which implies that the

marginal productivity of labour is lesser than capital.

The technical change is non-neutral in all the periods. The capital saving or

labour using technology is found in 3 product groups in a liberalized regime when

compared to 2 product group in the pre-liberalization period.

The labour saving technology is found in 7 product groups in the pre-

liberalization period and it is 6 product groups in the post-liberalization and also in

the post-MFA regime.

6.7 Conclusions

� The technical change is non-neutral in the pre- liberalization, post

liberalization period and post-MFA regime.

� The capital saving or labour using technology is found in 2 product groups in

the pre-liberalization and in 3 in the post-liberalization and post-MFA-regime.

The governments in both central and state supported the textiles industry with

number of concessions and incentives on the belief that they would generate

more employment opportunities. But it is interesting to note that they have to

adopt labour saving technology and cost-cut technologies have been adopted

in the the post-liberalization and post- MFA regime.

� The labour saving technology is found in 7 product groups in the pre-

liberalization and 6 product groups in post-liberalization periods and 6

product groups in post-MFA regime.

� Capital share in output is higher in the pre- liberalization and post-

liberalization period and labour share is high in the post MFA period.

155

6.8. The Major Inferences Observed from the Analysis are

• There is a better productivity trend in a competitive environment when trend

is fixed

• Productivity growth differentials are higher in the post-liberalization period

than in the pre-liberalization period in MPL, MRSLK, K/L and adjusted MPK.

and in the post- MFA regime the result is higher than post-liberalization

period.

• Technology is capital saving in the pre-liberalization period and labour saving

post-liberalization periods and post-MFA regime.

• Competition has brought in synchronization in the growth rates of various

parameters.

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Chapter VI TECHNOLOGY AND TECHNICAL PROGRESS IN INDIAN...

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