Reviewing Performance of Indian Sugar Industry: An Economic Analysis

Abstract

This paper attempts to measure the economic performance of Indian sugar industry in terms of capacity utilization measured econometrically at aggregate level over a period from 1979-80 to 2008-09. In this study, Optimal output is defined as the minimum point on the firm's short run average total cost curve and the rate of capacity utilization is merely ratio of its actual output to capacity output level. Under Choice theoretic framework, the results suggest that a significant variation in the capacity utilization rates over years within same industry was found. There has been diminishing capacity utilization growth rate in this industry during post reform period. The impact of liberalization on economic capacity utilization of Indian sugar industry is noticed to have significant negative impact.

Key words: Capacity, utilization, India, sugar, industry, liberalization.