Impact of policy reforms on the productivity growth of Indian coal mining: A decomposition analysis

Globalisation of the mining sector in India effectively began in 2005 in the form of opening up the sector for foreign direct investment (FDI) fully. This liberalisation has been criticised by some researchers, while some others have argued that the liberalisation has improved the productivity growth of the coal mining sector. These arguments necessitate further empirical analyses to gauge the productivity growth before and after the liberalisation. In this context, the paper analyses the sources of total factor productivity (TFP) growth in a decomposed formulation for the coal mining sector in India during 1988-2014. Further, a comparative analysis of TFP growth has been made by splitting the whole period into pre-liberalisation (1989-2005) and post-liberalisation (2006-2014) of the mining sector. It is found that technical efficiency change has significantly improved from 1.65% during 1989-2005 to 3.09% in 2006-2014, while technical progress has shown no such improvement even after opening up the sector fully. Thus, it calls for the attention of policymakers to enhance investment in technological upgradation as well as scale of operation of coal mining sector in India.