Evaluation of Technical Efficiency in Indian Sugar Industry: An Application of Full Cumulative Data Envelopment Analysis
Keywords:Data Envelopment Analysis, Bootstrapping, Indian Sugar Industry
This study focuses on the inter-temporal and inter-state variations in technical and scale efficiency levels of Indian sugar industry. In the first stage, full cumulative data envelopment analysis (FCDEA) is used to derive efficiency scores for 12 major sugar producing states. The panel data truncated regression is employed in the second stage to assess the key factors explaining the observed variations in the efficiency levels. The results suggest that the extent of technical inefficiency in Indian sugar industry is about 35.5 percent per annum, and the observed technical inefficiency stems primarily due to managerial inefficiency rather scale inefficiency. Also, a precipitous decline in the level of technical efficiency has been noticed in the postreforms period relative to the level observed in the pre-reforms period. The availability of skilled labour and profitability have been found to be most significant determinants of technical efficiency in Indian sugar industry.