Analyzing Regional Variations in Capacity Utilization of Indian Sugar Industry using Non-parametric Frontier Technique

Abstract

Using time series data spanning over the period 1974/75 to 2004/05, this paper provides the trends of capacity utilization (CU) levels in Indian sugar industry from regional perspectives. The results reveal that: i) on an average, the sugar industry in India is operating with the excess capacity in tune to 13 percent in each sampled year; ii) substantial variations in CU levels appear in the sugar industry of 12 major sugar producing states under consideration; iii) a precipitous decline in CU levels is noted in the post-reforms years relative to what has been observed in the prereforms period; iv) except the state of Rajasthan, the sugar industry in the remaining 11 states observed a significant decline in CU levels during the postreforms period relative to the pre-reforms period; and v) availability of raw material is most significant variable explaining the CU in Indian sugar industry.