Analysis of Bihar's food processing sector in the context of India's future global market system
Dr. Md. Tanweeer Alam
The growth in total factor productivity is not much impressive during the globalised trade regime for most of the industries within the informal food processing sector. However, those sectors where capital intensity has increased over the years could make the growth in total factor productivity levels. Gainers in terms of growth in TFP in the informal food processing sector in India are processing and preservation of meat, fish and products thereof. In Bihar the gainers are processing and preservation of fruits & vegetables, manufacture of vegetables & animal oils & fats, and prepared animal feeds. There has been a shift in businesses from the countryside to the cities, and the number of small businesses has gone down while the number of large businesses has gone up. The average size of an enterprise depends on many things, such as its financial situation, its capabilities, its location, its infrastructure and human capital, its type of ownership, and its age. In informal food processing businesses, the increase in labour productivity over the last 20 years is mostly due to an increase in the amount of capital used, not necessarily an increase in the amount of work done. Over time, Bihar's output has become less sensitive to changes in the amount of capital put in, while it has become more sensitive to changes in the amount of labour put in. In the own account manufacturing enterprises, the output elasticity of labour inputs is higher than in the non-directory manufacturing enterprises and the directory manufacturing enterprises, where it is lower. In most of the years we looked at, both at the national level and for Bihar, the industry's returns to scale went down.