The productivity change due to application of bio-fertilizer in groundnut Production has been studied using the partitioning model. The study has been conducted in Koratagere taluk of Tumkur district in Karnataka. The data pertaining to kharifseason of 1998 have been collected from 30 farms each with and without bio-fertilizer application, growing JL-24 variety and TMV-2 variety of groundnut crop, selected randomly from three Villages. The algebraic definition of yield has been used to formulate the Productivity differential decomposing model in terms of bio-fertilizer and biological innovation and technology interaction. The results have shown a productivity change of 497.60 kg/ha, of which 36.41 per cent has been due to use ofbio-fertilizer in groundnut production. The study has suggested that there is a scope to raise productivity through application of eco-friendly technologies like bio-fertilizers.