India KLEMS
Bishwanath Goldar
Institute of Economic Growth
Delhi, India
Research Advisor, India-KLEMS Project
Aim of the India-KLEMS Project
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To undertake research on India’s productivity
growth at the economy and sectoral level through
creation of a database on indicators of economic
performance;
To generate high quality time series on output and
inputs in various sectors of the economy
consistent with the National Accounts;
To create a productivity database for India that
would be comprehensive and internationally
comparable.
Participating Agencies
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The Project is being implemented by the Indian Council
for Research on International Economic Relations
(ICRIER) with financial support from the Reserve Bank
of India (RBI).
The project is getting data/ research/ intellectual support
from:
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Central Statistical Organization (CSO), Government of India;
Groningen Growth and Development Center, University of
Groningen, Netherlands; and
The Conference Board, New York .
A team comprising members from the RBI and experts
from the CSO is working closely with the ICRIER
research team.
Time Duration and Deliverables
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Time duration of the Project is three years:
2009-10, 2010-11, and 2011-12.
It has three phases of one year each.
In each phase, besides constructing data series,
analytical and policy oriented research papers
will be produced using the constructed
databases to focus attention on issues of
productivity and competitiveness of Indian
economy for policy use.
In addition, a Report and a Data Manual will be
prepared at the end of each phase.
Phases of the Project
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Phase I: Construction of time series data on Value
Added, Labour input, and Capital services input, and
value added based productivity estimates for 31 sectors
of the economy (covering the entire Indian economy)

Phase II: Construction of time series data on Gross
Output, and Labour, Capital, Materials and Energy
(KLEM) inputs, and gross output-based productivity
estimates for 31 sectors of the economy

Phase III: 71-industry database for value-added, labour
input and labour productivity, and productivity estimates
for 31-sectors using gross output-based growth
accounting and Labour, Capital, Material, Energy and
Services (KLEMS) as factor inputs
Coverage and Methodology
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
The output, input and productivity series will
cover the period, 1980 onwards (Current
estimates cover 1980 to 2004).
The project will follow, by and large, EU KLEMS
in regard to sectoral classification, theoretical
underpinnings of the empirical analysis,
methodologies and project strategies.
Improvement on past research
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There have been a lot of research on
productivity in the Indian economy.
The project improves on the past productivity
research on India in following respects:
 Comprehensive coverage
 International comparability
 Better theoretical basis for growth
accountancy –
inclusion of services input
 More accurate measurement of inputs – incorporating
changes in labour quality, changes in the composition
of capital assets, and growing use of ICT
How India KLEMS deviates from
EU KLEMS?

India KLEMS differs in two respects
 Manufacturing
industries are split into the organized
(10+ worker) and unorganized components (below 10
workers)
 Agriculture and allied activities sector which employs
about half of Indian workers is divided into five parts:
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Agriculture except plantation and animal husbandry
Plantation
Animal husbandry
Forestry
Fishing
Progress made so far
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Time series on real value added, labour input (quality adjusted), and
capital input (adjusted for changing composition and use of ICT)
have been constructed and productivity estimates have been made
for 31 sectors.
Manufacturing industries have been split into organized and
unorganized components and separate productivity estimates have
been made for these two components
Agriculture and allied activities sector has been split into five
industries and separate estimates of productivity have been made
for them.
Based on the constructed time series on output and inputs, and the
estimates of productivity, three papers have been written. A Report
is under preparation.
Key findings (1)
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TFP growth rate in the Indian economy during
1980-2004 is estimated at 1.3% per annum.
This is lower than the estimates of Bosworth,
Collins and Virmani (2006) for 1980-2004 and
Bosworth and Maertens (2010) for 1980-2006,
both about 2% per annum .
The estimate of Jorgenson and Vu (2005) for
1989-2003 of about 2.3% per annum is also
higher.
Key findings (2)
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TFP growth in
organized
manufacturing is
significantly higher
than that in
unorganized
manufacturing
Per cent per annum
Industry
Org.
Non-Org.
Food,
beverages,
tobacco prdts
2.4
-1.7
Textiles,
leather,
footwear
1.0
-4.5
Chemicals and 2.7
products
0.0
Non-electrical
machinery
-2.4
1.2
Key findings (3)
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TFP growth rate in
Agriculture and
allied activities
sector during
1980-2004 was
about 0.44% per
annum
Per cent per annum
TFP
growth
LP
growth
Agriculture except
plantation and
animal husbandry
0.40
1.06
Plantation
0.93
-0.08
Animal husbandry
2.80
5.17
Forestry
-1.73
-0.79
Fishing
-0.08
3.82
Thank You