COVID-19 and Productivity Performance of MSMEs and Large Firms in India.

The paper examines productivity performance of micro, small and medium enterprises (MSMEs) vis-à-vis large firms in India's organised manufacturing sector in the backdrop of COVID-19. To address simultaneity and endogeneity associated with firm size and productivity, the paper applies the Levinsohn and Petrin method to an unbalanced panel to estimate the production function and calculate the total factor productivity (TFP). The results suggest that productivity levels in financial years 2012 to 2022 were comparable between MSME firms and large firms, with the latter performing marginally better. TFP growth stagnated in the pre-pandemic period for both MSMEs and large firms. Post-COVID-19, productivity increased for both large firms and MSMEs, with productivity growth in MSMEs catching up with that of large firms. [ABSTRACT FROM AUTHOR]