An Analysis of Production Efficiency of Pottery Enterprises In India: Stochastic Production Frontier Approach

Pottery industry is considered as an eco-friendly small scale cottage base industry in India. In a predominantly rural country such as India, pottery plays a significant role in generating employment, increasing exports, etc. However, the flourishing pottery industry has encountered various hurdles that threaten their livelihood. The study is attempted to investigate the socio-economic conditions of pottery artisans in India. Another objective is to analyze the technical efficiency and determinants of inefficiency of pottery enterprises in India. Secondary data from the 73rd National Sample Survey Organization (NSSO) unit-level data on the Unincorporated non-agricultural enterprise Survey 2015-16 is being used in study. In our study, we have used the data on various socio-economic variables using the National Industrial Classification codes (NIC codes) mentioned under NIC code 23933. 811 enterprises were taken into the survey. A simple descriptive analysis was used to study the general socioeconomic background of the pottery manufacturers. The changes in the factors and their association with pottery production were examined by fitting the stochastic frontier production function with determinants of inefficiency. Thus, the model estimates both technical efficiency and time-varying technical inefficiencies. The study reveals that pottery workers continue to grapple with numerous socio-economic challenges that hinder their overall well-being and the sustainability of their craft. This occupation remained in the rural spheres. In addition, gender biasness can be seen in the field of potter. The study also shows that the cost of raw material, any other cost, number of hours spent enterprises, production tax and daily hour spent are positively associated with the production efficiency and trading cost is negative associated with production efficiency of pottery enterprises. This research study employs the stochastic production frontier which help in assessing the production efficiency and identifying the key determinants of inefficiencies which will provide novel insights into the sector productivity, offering valuable recommendations for policy interventions to enhance the performance of pottery enterprises.