CHAPTER-III

RESEARCH METHODOLOGY

The present study was designed to assess the regional disparity with respect to
important of social and economic indicators of the Indian economy. The study was
based on the secondary data and three most important economic indicators namely
education, health and income are the main concern of the present study. The detail
methodology have been followed to accomplish the objectives of the study are
discussed in detail in this chapter.
Regional distribution
Taking into consideration the objectives of the study, all the states and union
territories of India have been divided into five regions according to Administrative
divisions of India as mentioned below:
S. No Region States/UTs
Haryana, Himachal Pradesh (HP), Jammu and Kashmir, Punjab,
1 North
Rajasthan, Uttar Pradesh (UP), Uttarakhand, Chandigarh and Delhi
2 West Goa, Gujarat, Maharashtra, D& N Haveli and Daman & Diu
Andhra Pradesh (AP), Karnataka, Kerala, Tamil Nadu,
3 South
Lakshadweep, Telangana and Pondicherry
4 East Bihar, Jharkhand, Odisha and West Bengal
5 Central Chhattisgarh and Madhya Pradesh
Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram,
6 North-East
Nagaland, Sikkim, Tripura and A&N Islands
Data collection
Data collection required for the present study is very exhaustive exercise. Various
sources have been approached to compile the following specific data:
Sector Attributes
Education State-wise recent data of number of educational institutions, enrollments,
gross enrolment ratio (GER), number of teachers, Pupil-teacher ratio,
facilities etc.
Health CBR, CDR, TFR, IMR, NNMR, ENMR, PNMR
Income GSDP, NSDP,GDP at Factor Cost, GDP at Market Prices, NDP at Market
Prices , NNP at Factor Cost ,Personal Disposable Income, Gross Domestic
Capital Formation , Consumption of Fixed Capital, Indirect Taxes less
Subsidies, Gross Domestic Saving, Net Domestic Saving, Capital
Expenditure, Capital Receipts, Interest Payments, Nominal GSDP,
Outstanding Liabilities, Own Tax Revenues ,Revenue Expenditure,
Revenue Receipts, Per capita income (Rs)

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Data analysis
The raw data has been compiled in excel sheets for its logical analysis. The data were
analysed by using simple statistical tools like average, percentages, etc. However
following specific analytical techniques have applied to interpret the regional
distribution of level education, health and income among different regions of the
country:

Growth rate
Growth rate refers to the rate of growth per annum. It is denoted in percentage terms.
Annual growth rate has been work-out by using the time-series data on various
estimates of Indian economy by using the following formula

Annual growth rate (%) =

1  E c  Eb 
   100
N  Eb 
Where,
N is the total number of years
Ec is the estimates of current year
Eb is the estimates of base year

Regional disparity
Regional disparity is the most important concerns of developing countries like India.
Regional disparity is the inequalities that appear within the states of a region which
causes unstable development. Regional disparities are characterized by the significant
level of variability with regard to intensity of various economic and social indicators
in terms of quality and quantity. Many researchers have followed easiest way to
assess the regional development simply by calculating the standard deviation of
selected social and economic indicators. This method is inappropriate measure
because this method compares only the lowest and the highest value. Hence, the most
appropriate measure is the coefficient of variation, since it is not dependent on
measured values of input parameters as compared to standard deviation (Hamada,
2013).

Later on, it was realized that the calculation of regional disparity on the basis of the
coefficient of variation was also inappropriate for detailed analysis. The incorrect

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interpretation may be also due not to taking into account the territorial size of
individual regions. To this end, we can modify the coefficient of variation into the so-
called weighted coefficient of variation, which represents the relative measurement of
dispersion standardized by the mean value of variable. Deviations from this value are
weighted by the proportion of population in the region to the country's total
population. This factor is independent of variable size, and therefore it is usually used
to measure imbalances over time. In the present study, the value of weighted
coefficient of variation is term as regional disparity Index. Mathematically, it is
written as under:
 pi 
   P
Regional disparity Index (RDI) =  100 
X   n 
 
Where,

‘ X ’ is the mean value of selected indicator in the region,

‘  ’ is the standard deviation of selected indicator in the region,
Pi/P is the proportion of region with respect to selected indicator in the total national
figure
‘n’ is the number of states in a region

Concepts and definitions

Gross Enrolment Rate (GER): Total enrolment in a specific level of education,
regardless of age, expressed as a percentage of the eligible official school-age
population corresponding to the same level of education in a given school-year.

School-age Population: Population of the age group which officially corresponds to

the relevant level of education.

Gender Parity Index (GPI)

The Gender Parity Index based on Gross Enrolment Rate (GPI- based on GER), is the
ratio of Gross Enrolment Rate of female students enrolled at Primary, Secondary and
Tertiary levels of education to the corresponding ratio of male students at that level.
Thus GPI-based on GER is free from the effects of the population structure of the
appropriate age group which provides picture of gender equality in education.

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 Methodological framework for estimating regional disparity of health
parameters
Since the data on most of the health indicators is available in terms of ratio or rate,
therefore, the regional disparity with regard to crude birth rate, crude death rate, infant
mortality rate etc has been interpreted on the basis of the value of coefficient of
variation and the range i.e. the minimum and maximum value. Mathematically, it is
written as under:
 
Regional disparity Index (RDI) =  100
X 
Where,

‘ X ’ is the mean value of selected indicator in the region,

‘  ’ is the standard deviation of selected indicator in the region,

However, the data with respect to number of health institutions, number of doctors,
health workers, sub-centres etc. are available in absolute numbers, therefore, the
regional disparity in this case have been calculated by using the following formula:
 pi 
   P
Regional disparity Index (RDI) =  100 
X   n 
 
Where,

‘ X ’ is the mean value of selected indicator in the region,

‘  ’ is the standard deviation of selected indicator in the region,
Pi/P is the proportion of region with respect to selected indicator in the total national
figure
‘n’ is the number of states in a region

Definition and terminology of health indicators

Crude Birth Rate (CBR)

The crude birth rate is the number of live births occurring among the population of a
given geographical area during a given year, per 1,000 mid-year total population of
the given geographical area during the same year.
or

37
It is the number of resident live births for a specified geographic area (nation, state,
county, etc.) during a specified period (usually a calendar year) divided by the total
population (usually mid-year) for that area and multiplied by 1,000.
CBR = (Number of resident live births / Number of total population) x 1,000

Crude death rate (CDR)

The crude death rate is the number of deaths occurring among the population of a
given geographical area during a given year, per 1,000 mid-year total population of
the given geographical area during the same year.

Total fertility rate (TFR)

Total fertility rate refers to the number of children or births that a woman would have
during the course of her life.

Infant mortality rate (IMR)

Infant mortality rate refers to the number of deaths occurring among children under
the age of one year against 1000 live births in a given geographical area during the
period of one year. This is calculated as:
IMR = (Number of deaths among children under one year/Total number of live
births) × 1000
Infant mortality rate is considered a useful indicator of both maternal and newborn
health and care. Therefore, infant mortality rate is further classified into Neo-
natal Mortality Rate (NNMR), Early Neo-natal Mortality Rates (ENMR), Peri-Natal
Mortality Rates (PNMR) on account of making the analysis more rationale for the
present study.

Neo-natal Mortality Rate (NNMR)

Neo-natal mortality rate (NMR) is the incidence of infant deaths that happens in 0-28
days of birth i.e. it is number of infant death that happens within 28 days in one year
against 1000 live births.

Early Neo-natal Mortality Rates (ENMR)

Early neo-natal mortality rate (ENMR) refers to the number of infant death that

38
happened in less than 7 days of birth in one year against 1000 live births.

Peri-Natal Mortality Rates (PNMR)

Peri-natal mortality rate (PNMR) refers to the number of still deaths and infant deaths
of less than 7 days of birth in one year against 1000 live births.

Compound growth rate (CGR)

National estimates on income and expenditure have shown an increasing trend
over the period of last few decades. An annual compound growth rate for the
period of 1970-71 to 2015-16 was worked out to assess the trends with respect to
various income and expenditure estimates of the country. Compound growth rate
(CGR) was worked out by using the power function as given below:
Y= a b t
Where, Y = dependent variable
a = constant term
b = (1+r), regression coefficient
r = (b-1)* 100, compound growth rate in percentage
t = time variable

 Methodological framework for estimating regional disparity of various

income and expenditure estimates
The regional disparity with respect to respect to absolute value of income and
expenditure estimates such as gross state domestic product, net state domestic
product, population below poverty line, capital revenue, capital expenditure, interest
payments etc. have been calculated by using the following formula:
 pi 
   P
Regional disparity Index (RDI) =   100 
X   n 
 
Where,

‘ X ’ is the mean value of selected indicator in the region,

‘  ’ is the standard deviation of selected indicator in the region,
Pi/P is the proportion of region with respect to selected indicator in the total national
figure

39
‘n’ is the number of states in a region
However, the regional disparity with regard to income estimates on per capita basis
such per capita gross state domestic product, per capita net state domestic product and
per capita national income has been interpreted on the basis of the value of coefficient
of variation and the range i.e. the minimum and maximum value. Mathematically, it
is written as under:
 
Regional disparity Index (RDI) =  100
X 
Where,

‘ X ’ is the mean value of selected indicator in the region,

‘  ’ is the standard deviation of selected indicator in the region,

Definition and terminology of health indicators

Gross state domestic product (GSDP)

Gross state domestic product is defined as a measure, in monetary terms, of the
volume of all goods and services produced within the boundaries of the State during a
given period of time, accounting without duplication.

Net state domestic product (NSDP)

Net state domestic product is defined as a measure, in monetary terms, of the volume
of all goods and services produced within the boundaries of the States during a given
period of time after deducting wear and tear or depreciation, accounting without
duplication.

GDP at Factor Cost

Gross Domestic Product at factor cost is the sum of net value added by all the
producers in the domestic territory of the country and consumption of fixed capital
during an accounting year
GDP at Factor Cost = GDP at Market Price –Indirect Taxes + Subsidies

GDP at Market Prices

The gross value at market prices of all goods and services produced by the economy,

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plus taxes but minus subsidies on imports.
GDP at Market Price = GDP at Factor Cost +Indirect Taxes - Subsidies

NDP at Market Prices

It is the market –value of all final goods and services produced within the domestic
territory of a country during an accounting period minus depreciation.
NDP at Market Prices = NDP at Factor cost + Indirect Taxes -Subsidies

NNP at Factor Cost

Net national Product(NNP) refers to gross national product(GNP), the total market
value of all goods and services produced by the factor of production of a country or
other polity during a given time period, minus depreciation.
NNP at Factor Cost = GNP at Factor cost –Depreciation
NNP at Factor Cost = NNP at market cost –Indirect Taxes

Personal Disposable Income

Disposable income is the amount of money an individual has after taxes.
Disposable Personal income =Personal income –Personal Tax Liability

Gross Domestic Capital Formation

GDCF is a measure of the total expenditure on investment by the production units
within the economic territories of a country.
GDCF= GDFCF+ CS + NAV
Gross domestic fixed capital formation (GDFCF)
Changes in stock of a year (CS)
The net acquisition of valuables by enterprises and households (NAV)

Consumption of Fixed Capital

Consumption of fixed capital represents the amount of fixed assets used up, during the
period under consideration. Consumption is the result of normal wear and tear and
foreseeable obsolescence, including a provision for losses of fixed assets as a result of
accidental damage which can be insured against.

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Indirect Taxes less Subsidies
Indirect taxes are the sum of indirect taxes less subsidies. Indirect taxes are those
taxes payable by producers that relate to the production, sale, purchase or use of the
goods and services. Subsidies are grants on the current account made by general
government to private enterprises and unincorporated public enterprises.

Gross Domestic Saving

Gross Domestic Saving is GDP minus final consumption expenditure. It is expressed
as a percentage of GDP.
GDS = GDP - FCE

Net Domestic Saving

Domestic Saving by type of institution at current prices saving represents the excess
of current income over current income over current expenditure of various sectors of
the economy. It is the balancing item on the income and outlay accounts of the
producing enterprises, households Government administration and other final
consumers.

Capital Expenditure
CapEx=ΔPP&E + Current Depreciation
where:
CapEx = Capital expenditures
ΔPP&E= Change in property, plant and equipment.

Capital Receipts
Capital receipts are a non recurring incoming cash flow into your business, which
leads to the creation of a liability and a decrease in company assets.

Interest Payments
A payment amount determined by the interest rate on an account. As a borrower, an
interest payment represents the rate charged for being amount funds. As an investor,
interest payments represent income on earned on cash accounts or fixed and variable
rate securities.

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Nominal GSDP
Nominal Gross Domestic product is gross domestic product evaluated at current
market prices.GDP is the monetary value of all the goods and services produced in a
country.

Outstanding Liabilities
The amount of liability which is yet to be paid as on the balance sheet is known as
outstanding liability.
OL = TOL / TNW
Total outside liability is the sum of all the liabilities of the business and total net
worth is the sum of share capital and surplus reserves of the company.

Own Tax Revenues

It means government income due to taxation. The data contains actual, Pre-actual and
budgeted expenditure for own tax revenue, GSDP, Own Tax revenues-State Share &
Percent GSDP and Own tax revenue of states & Uts.

Revenue Expenditure
Revenue expenditure is a cost that is charged to expense as soon as the cost is
incurred. By doing so a business is using the matching principle to link the expense
incurred to revenues generated in the same reporting period.

Revenue Receipts
All Government receipts which either create liability or reduce assets are treated as
capital receipts where as receipts which neither create liability nor reduce assets of
Government are called revenue receipts.

Per capita income (Rs)

Per Capita Income or average income measure the average income earned per person
in a given area in a specified year. It is calculated by dividing the area’s total income
by its total population.
PCi = i/p
where
PCi = Per Capita Income

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i = Total personal Income
p = Total Population

Conversion of various health indicators to absolute number

Since the various health indicators represented in terms of rate such as crude birth
rate, crude death rate, infant mortality rate, under five year mortality rate, maternal
mortality rate and total fertility rate, but the study requires absolute number for
calculating region-wise rate of these indicators. Taking into account the magnitude of
population, the absolute number of all above said health indicators of all states was
worked out by using applying following formula:
HISi = (Pi × RHIi) ÷ 1000
Where
HISi = Health indicators of individual state in absolute number such as number of
births, deaths, number of infant mortality etc. of individual state
Pi = Population of respective state
RHIi = Figure of health parameter in terms of rate such as figure of crude birth rate,
crude death rate, infant mortality rate etc corresponding to respective state

Region-wise calculation of health indicators in terms of rate

After obtaining the absolute number of births, deaths, number of infant mortality,
number of infant mortality under five years etc. region-wise rate of these health
indicators were worked out by using following formula:
n

 HIS i
HIR = i 1
n
 1000
P i 1
i

Where,
HIR is health indicator of region in terms of rate such as crude birth rate, crude death
rate, infant mortality rate etc
‘n’ is the number of states come under the territory of respective region
HISi is the Health indicators of individual state in absolute number, and,
Pi is the population of respective state

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Calculation of regional disparity index in case of health, education and income
The mathematically form of the regional disparity index is written as under:
 pi 
   P
(RDIH) =   100  ............................................(A)
X   n 
 

 pi 
   P
(RDIE) =   100  ............................................(B)
X   n 
 
 pi 
   P
(RDII) =   100  ............................................(C)
X   n 
 
Where,
RDIH refers to regional disparity with respect to various health indicators
RDIE refers to regional disparity with respect to various education indicators
RDII refers to regional disparity with respect to various income estimates

‘ X ’ is the mean value of selected indicator in the region,

‘  ’ is the standard deviation of selected indicator in the region,
Pi/P is the proportion of region with respect to selected indicator in the total national
figure
‘n’ is the number of states in a region.

Overall disparity index

Taking into consideration the regional disparity index with regard to three important
economic indicators i.e. health, education and income, an overall disparity index of
different region has been calculated by using formula:

 RDIH RDIE RDII 

 n  n  n 
ODI =  1 2 3

 3 
 
 
Where, ODI is overall disparity index
RDIH refers to regional disparity with respect to various health indicators
RDIE refers to regional disparity with respect to various education indicators
RDII refers to regional disparity with respect to various income estimates

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‘n1’ is number of health parameters
‘n2’ is number of educational parameters and
‘n3’ is number of income parameters

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