Indian Council for Research on International Economic Relations

Completed Details

Determinants of Growth and Development in Indian States

Project Leader: Dr. Subhanil Chowdhury (external consultant)
Research Team: 

February 2010

Commencement:  February 2010
Completion: May 2011
Funded by:  ICICI Foundation for Inclusive Growth

This study analyses the determinants of growth and development in Indian states with respect to a suitable indicator of development. The conventional Human Development Index (HDI) developed by the UNDP relies heavily on the concept of GDP which, arguably, is not a sufficient indicator of human development. This study argues that: first, the variables included in the HDI are not enough to capture human development in its entirety; and second, the constituent variables in HDI are given equal weights, which is not very robust.

In order to overcome these problems with the HDI, two additional variables, viz. employment and poverty, were introduced. These variables were combined by using principal component analysis to arrive at a broader index of human development, called the Augmented Human Development Index (AHDI).

The analysis of data at the state level showed that states that performed well in the pre-reform era (1983-84) are typically also the ones that appear to be performing well in the post-reform era (1990- 2005). The paper argues that the role of the government in the social sector has to be greater and it has to encourage higher investments in economic infrastructure.



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