Institute for Social and Economic Change

Working Paper: 410

An Evaluation of Input-Specific Technical Efficiency
of Indian Fertilizer Firms

Soumita Khan


This paper examines the competitiveness of Indian fertilizer firms by computing their input- specific technical efficiency from 1993-94 to 2012-13, using stochastic frontier approach. Analysis of input efficiency is important as it provides us with insights into output efficiency. Tracking economy-wide input efficiency performance has recently received increasing attention in manufacturing industries. The main point to be noted is that energy- specific technical inefficiency plays a major role in inter-firm efficiency differences of the fertilizer sector. Also, measures of input- specific technical efficiency may be useful for policy purposes. From our present study on fertilizer sector, the production planners will have tools to set targets of different inputs to produce a given level of output and can take a measure aiming to reduce technical inefficiency of a specific input. Another highlighting issue from of this study is that the relation between the size of the fertilizer firm and their consumption per unit of energy in case of fertilizer sector is not effective too much. That means size is always not a significant factor for a firm’s energy efficiency measurement.


Working Papers