Performance Measurement of State Level Public Enterprises: An Analysis of Construction Sector using DEA and Malmquist Analysis

Abstract

SLPEs have played an important role in the economic development of the State. Assessment of their performance is critical for understanding their position is the Indian economy and provides useful information to policymakers. We have examined the determinants of 8 SLPEs of the Construction sector for the duration 2008-09 to 2015-16. The relative performance has been measured using DEA analysis. Under the study, the DEA technique is used to determine the efficiency frontier (the envelope) from the input and output (financial data) of the SLPEs. In public sector previous studies confronted with weak knowledge of underlying technology, which poses a problem of specification in the selection of variables. We note that the performance of State level public enterprises in Indian is characterized by low performance and a significant variation in the performance parameters. DEA approach is used to generate combined measures for enterprise performance by benchmarking them against the efficiency frontier. Then the Malmquist productivity index is prepared to investigate the performance from 2008-15, and decomposed to know the cause behind the change in individual enterprise. We find that none of the SLPE able to achieve perfect efficiency in transforming inputs into output, SPE3 reached very near to perfect efficiency and SPE5 displayed worst efficiency levels.