Productivity change of coal‐fired thermal power plants in India: a Malmquist index approach

Coal‐based power plants in India account for about 53% of installed capacity and contribute to more than 60% of electricity generation. Making use of data envelopment analysis and the Malmquist productivity index, this study analyses the productivity change of these plants during the period 2003–2008. The productivity change is further decomposed into technical efficiency change, technological change and scale efficiency change. The impact on productivity of capacity addition and scrapping obsolete power‐generating modules is examined. It is found that the sector recorded an average annual total factor productivity (TFP) growth of 1.2% during the period. The plants located in eastern and southern regions have achieved maximum annual growth of 2.2% and 2.0%, respectively. Plants in the central sector achieved maximum growth of 4.2% annually. It is also found that the impact of capacity addition resulted in reduced TFP growth. This study identifies the plants whose productivity changes have been progressive and regressive; such identification can guide suitable managerial intervention to improve productivity.