Vol. 2, Issue 1, Part K (2016)

Abstract
The objective of this paper is to examine changes in productivity in the Indian organized manufacturing sector at regional level and explore its linkage with wages. We use Annual Survey of Industries data since 1980/81 to 2009/10 to analyse the growth and changes in organised manufacturing at two-digit level. Although being one of the most populous countries in the world, India only has 39.2 percent of total working population out of which 42 percent comes from rural India. Also, out of the total workers, male workers which constitute the major part i.e. around 52 percent (Census of India, 2001). Two digit level industry wise comparative growths have been sluggish in the post reform period for majority of unregistered sector and vice versa for the registered sector (Report on Small Scale Industries Sector, 2000, SIDBI). During this period, large investments were made in building up capacity over a wide spectrum of industries with a view to achieve rapid industrialization. This rapid stride in industrialization was accompanied by a corresponding growth in technological and managerial skills not only for efficient operation for highly complex and sophisticated enterprises, but also for their planning, design and construction. In this era, industrial competitiveness has taken the center stage of policy discussions in India. Unit labour costs are used to measure the competitiveness because it is felt that wages form a major component of the fixed cost and hence directly impact the profitability. There observed considerable variations in the wage rate and labour productivity across the different sub-sectors of the Indian Industry. The analyses of labour productivity, total factor productivity and real wages show that growth of real wages is not uniform across industries and there are large disparities across states. Calculations of partial and total factor productivity for the sub-periods also reveal marked inter-temporal differences in the growth rate. Finally, I find that TFP and labour productivity have a stronger influence on wages along with factors like skill, size and capital-labour ratio.