0973703020110208

Indian Journal of Human Development, Vol. 5, No.
2, 2011
Is There Any Interdependence between

Economic Growth and Human Development?
Evidence from Indian States
Sacchidananda Mukherjee and Debashis Chakraborty*
Th is pape r atte m pts to anal yse th e evol

ving re l
ationsh ip betw e e n econom ic grow th and h um an
deve lopm entfor 28 m ajor Indian state s during four tim e periods ranging ove r th e l asttw o de cade s,
viz. 19 83, 19 9 3, 19 9 9 - 2000 and 2004- 05. Th e objective of th is exe rcise is to unde rstand w h eth e r
and vice versa across Indian state s. Th e NationalH um an D e vel opm e nt Report 2001 m e th odol ogy
h as be e n appl ie d for constructing th e H um an D eve l opm ent Inde x (H D I) for th e Indian states. Th e
H D I h as bee n constructe d separate l y for ruraland urban are as for each of th e states in orde r to
h igh ligh t th e im portance of rural –urban disparity in de te rm ining h um an deve l opm ent. Th e re sul t
indicate s th at pe r capita incom e is not strictl y being transl ate d into h um an w e ll- being, w h ich
sh oul d be an are a of concern for th e pol icy- m ak ers. Th e obtaine d re sul
t also indicate s th e rising
K e yw ords: Econom ic grow th , H um an deve l

opm ent, H um an D e vel
opm e nt Index m e th odol
ogy,
Econom ic libe ralization, Indian states
INTRODUCTION
India’s impressive economic growth during the recent period has been greatly shaped by the
economic reform process initiated since 1991. The reform process has introduced changes in
both the external [signifying an emphasis on an export-oriented growth model, relaxation of
Foreign Direct Investment (FDI) regulations, tariff reforms, Special Economic Zone (SEZ)
policy] as well as the internal (characterized by unshackling of industrial licensing, enhancing
private participation in agriculture, requisite financial and fiscal measures) policy environment.
These reform measures have contributed significantly towards ensuring a steady growth path for
the country over the last decade. In addition to the creation of a higher level of economic growth
(EG) during the current period, the reform process is also expected to indirectly augment the
growth rate in the long run. For instance, the rising income level greatly enhances the capacity
of the economic players (that is, the government or an individual) to raise the general level
of human development (HD) during the current period (through augmentation of health and
educational achievements), which, in turn, creates positive externalities for economic growth.
Patnaik and Vasudevan (2002) have rightly noted that cutting expenditure on HD without
improving services would have an adverse impact on long-run growth opportunities.
* Assistant Professors, National Institute of Public Finance and Policy (NIPFP) and Indian Institute of Foreign
Trade (IIFT), New Delhi, respectively. Emails: sachs.mse@gmail.com; debchakra@gmail.com, respectively.
468 Indian Journal of Human Development
In order to both comply with the Millennium Development Goals (MDGs) as well
as augment HD in the country as part of the ongoing efforts, India has introduced a
number of requisite policy measures over the last decade. While some of them (for
example, health and education-related policies) influence HD directly, the others (for
example, social access, infrastructure augmentation, etc.) create an indirect but long-
lasting effect on the same. First, on the education front, the Sarva Shiksha Abhiyan (SSA)
has been initiated for universalizing elementary education among children aged 6-14
years across the states and the National Programme on Mid-Day Meals in primary
schools also deserves mention in this regard. The proposed Rashtriya Madhyamik
Shiksha Abhiyan (RMSA) can also be cited as an example of a progressive education
programme. Second, the creation of new Indian Institutes of Technology (IITs), Indian
Institutes of Management (IIMs) and central universities in recent times has been
geared towards facilitation of higher education in the country. Third, on the health
front, the goals of the National Rural Health Mission (Ministry of Health and Family
Welfare, NRHM, 2005-12)1 include: reduction in the Infant Mortality Rate (IMR) and
the Maternal Mortality Ratio (MMR), universal access to public health services such as
women’s health, child health, water, sanitation and hygiene, immunization, nutrition,
and prevention and control of communicable and non-communicable diseases,
including locally endemic diseases, among other things. All these cumulatively lead
to higher HDI achievements. Fourth, the Pradhan Mantri Swasthya Suraksha Yojana has
been introduced for correcting regional imbalances in the provision of health services,
especially focusing on the vulnerable states. Finally, among the indirect measures on
this front, the introduction of Mahatma Gandhi National Rural Employment Guarantee
Act (MGNREGA) for rural areas, Right of Children to Free and Compulsory Education
Act and the proposed Food Security Act deserve special mention. All these measures
are expected to enable India to move closer to the fulfilment of the related MDGs by
the stipulated deadline, that is, 2015. The above-mentioned set of policies is likely
to ensure the enhanced participation of a healthy and educated population in the
working age group, enabling India to effectively reap the benefits of the demographic
dividend.
The GDP growth rate in India has broken away from the Hindu rate of growth
during the post-liberalization period, thereby establishing an increasing association
with the world economy. There is a need to explore the extent to which the growing
per capita income (as an indicator of economic growth) has influenced HD in India
and vice versa. Through a secondary cross-sectional data analysis, this paper intends
to analyze the evolving relationship between EG and HD for 28 major Indian states
during four time periods ranging over the last two decades, viz. 1983, 1993, 1999-2000
and 2004-05 [that is, in line with the National Sample Survey Organization’s (NSSO’s)
quinquennial rounds]. While 1983 marks the pre-liberalization era during which
period the economy was characterized by a moderate growth rate, 1993 captures the
scenario shortly after the initiation of reforms, with limited growth experiences. The
reform process was almost a decade old during the year 1999-2000, but the EG during
the preceding period was influenced by several external and internal events (such
as the Southeast Asian Crisis during 1997-98, and three General Elections during the
Interdependence between Economic Growth and Human Development 469
years 1996-99, among other things), which could have limited the transmission of EG
into HD. However, the last period, that is, 2004-05, has been relatively stable, with a
number of policies pertaining to HD and augmentation of the quality of life already
in place.
However, one major feature of the economic growth witnessed during the recent
period has been the growing rural–urban disparity,2 as a result of which constructing
a unique Human Development Index (HDI) for a state might not reflect the actual
scenario. Therefore, in order to separately estimate the inter-relationship between EG
and HD in the rural and urban belts, the HDI is constructed for both the rural as well
as urban areas for each of the states.
The current paper is organized as follows. A brief literature survey on the
relationship between EG and HD is followed by a discussion on the methodology
adopted in this paper, the empirical results and the policy observations, respectively.
ECONOMIC GROWTH AND HUMAN DEVELOPMENT

Economic growth (EG) has always been a weak indicator for measuring development,
with the quality of life obtaining a greater emphasis in this regard (Srinivasan, 1994).3
Nevertheless, the literature on the relationship between EG and HD is quite rich,
indicating that the causality might work in both directions. In other words, while
the process of high growth might facilitate the augmentation of HD in a country,
the latter also contributes positively towards ensuring the former. Ranis (2004) and
Ranis, et al. (2000) note that the nations/states may enter either into a virtuous cycle
of high growth and large HD gains (for example, the Scandinavian countries), or a
vicious cycle of low growth and low HD improvement (for example, several African
states). Mayer-Foulkes (2007) notes the presence of a similar low-HD trap in Mexico.
Confirming the two-way causality, Ramirez, et al. (1997) have observed that while
public expenditure on social services and female education are important factors in
influencing the strength of the relationship between EG and HD, the investment rate
and income distribution play key roles in determining the strength of the converse
relationship.
The existing governance mechanism or institutions in a country can also play a
key role in strengthening the EG–HD relationship. Amin (undated) has noted that
institutions contribute significantly to EG by expanding the capabilities and by
creating a conducive environment, which ensure the proper functioning of the socio-
politico-economic life of societies and economies. Joshi (2007) concludes that good
governance was responsible more for HD outcomes (in terms of education, health
and longevity) than for EG, per capita investment or per capita income for Indian
states during the 1980s to the early 2000s. The study also notes that though there
exist positive relationships between HD and EG, they may not be automatic in either
direction. On the other hand, a higher initial level of HD may, in turn, augment
governance mechanisms (for example, lesser corruption) and indirectly fuel the
process of EG (Costantini and Salvatore, 2008). Among other factors, Christoforou
(2006) has noted the importance of social capital formation in addition to economic
growth in determining the HD augmentation process by examining the experience of
the European countries.
The cross-country relationship between Per Capita GDP (in PPP USD) and the HDI
score (obtained from UNDP, 2009) is presented in Figure 1. The figure shows that from
the cross-country perspective (for 144 countries), as the per capita income increases,
the HDI score increases up to a level beyond which it reaches a plateau. The result
indicates that in a multi-country framework, the per capita income is necessarily an
ingredient for achieving a higher level of HD. The cross-country analysis of Mukherjee
Figure 1
The Relationship between Per Capita GDP and HDI Score: 2007
Source: Generated by the authors on the basis of UNDP (2009) data.
and Chakraborty (2010a; 2010b) has noted that HD is positively and linearly related to
both political openness and the income level, indicating that the countries characterized
by higher levels of income and a better democratic set-up are likely to witness higher
HD achievements.4
An extensive analysis of the global HD situation as well as country rankings can
be obtained from the UNDP’s annual publication of the Human Development Report
(HDR), from which India’s achievements on the HR front can be ascertained. While
India remained in the low HD category throughout the 1990s, in 2002 it graduated to
the medium HD level. In 2005, it secured a composite HDI score of 0.619, as compared
to the corresponding figure of 0.439 in 1990. India’s global HDI rank has also changed
from 132nd in 1999 to 134th in 2007, while the number of countries covered also
increased during this period.5
In the new millennium, the Government of India has, in association with UNDP,
started analysing the state-wise HD status. The National Human Development Report
(NHDR), 2001 (Government of India, 2002), brought out by the Planning Commission,
is worth mentioning in this regard. While the report ranked Kerala, Punjab and Tamil
Nadu as the toppers, Bihar, Madhya Pradesh and Uttar Pradesh were placed at the
other extreme on the HD scale.6
The evidence from the literature shows that India displays a two-way causality
between EG and HD, indicating the possibilities of vicious cycles (Ghosh, 2006).
The view receives credence from the analysis of Ravallion and Datt (2002), which
has observed that the non-farm growth process has been more pro-poor in states
characterized by higher HD achievements like a high initial literacy rate, higher
farm productivity, higher rural living standards (relative to urban areas), lower
landlessness and lower infant mortality. A similar observation has been made by
Antony and Laxmaiah (2008), who have found that extreme poverty is concentrated
in the rural areas of northern States while income growth has been dynamic in the
southern States and urban areas. In addition, an increment in India’s HDI value as per
the UNDP report over time has contributed little in improving the under-nutrition
situation among pre-school children in both rural and urban areas. Ojha and Pradhan
(2006) have noted that increased investment in human capital formation, with a
higher priority being accorded to secondary education, would ensure faster economic
growth and better income distribution. The evidence from literature calls for greater
government involvement to strengthen the linkage between HD and EG.
METHODOLOGY AND DATA
Human Development Index (HDI)

In line with the principle of the methodology used in the NHDR 2001 for calculation of
the Human Development Index (HDI) for Indian states, three variables—the per capita
consumption expenditure, composite index of educational attainment, and composite
index of health attainment—are considered here. With this formulation, following the
NHDR, 2001 methodology, the HDI score for the jth state is given by the average of the
normalized values of the three indicators, namely, inflation and inequality adjusted per
capita consumption expenditure ( X 1 ); the composite indicator on educational attainment
( X 2); & the composite indicator on health attainment ( X 3 ). The normalization is done
by dividing the difference between any variable ( X ij ) within these categories and the
minimum value of X i to the difference between the maximum and the minimum value
of X i .
As per the UNDP methodology, the real GDP Per Capita in PPP USD is considered
for constructing the HDI. However, NHDR, 2001 instead preferred the inflation- and
inequality-adjusted average monthly per capita consumption expenditure (MPCE) of
a state for conducting the analysis, and the current study adopts the same approach.
The monthly per capita consumption expenditure data, obtained from NSSO’s
quinquennial surveys (38th Round: 1983, 50th Round: 1993-94, 55th Round: 1999-2000,
and 61st Round: 2004-05), is first adjusted for inequality by using the state-wise Gini
Ratios (also provided in the quinquennial rounds), and is then further adjusted for
inflation to bring the ratios to 1983 prices by using deflators derived from the state-
specific poverty line (Government of India, 2002).
For determining the average MPCE, consideration of the level of expenditure for
a state is not sufficient to assess economic attainment. There is a need to factor in the
distribution of the average MPCE across the population of the state (which is captured
through the Gini Ratio). The idea is that a state characterized by a high average MPCE
and a low Gini Ratio is better vis-à-vis a state with a high average MPCE and a high Gini
Ratio. Therefore, the average MPCE for a state is adjusted for inequality to facilitate
correction for the prevailing level of inequality in the consumption expenditure of the
population even at the sub-regional level of a state. The adjustment is carried out for
the rural and urban population separately. The inequality-adjusted MPCE is further
adjusted for inflation, by considering the state-specific poverty line, for the period of
our consideration to make it amenable to inter-temporal and inter-spatial comparisons.
The adjustment has been done in the following manner. If GRij is the Gini Ratio
for the jth state for the ith period and MPCEij is the average monthly per capita
consumption expenditure for the jth state for the ith period, the inequality-adjusted
average monthly per capita expenditure for the jth state for the ith period (IMPCEij) is
expressed as , where . After adjustment for inequality for
each of the states, the adjustment for inflation is carried out. If PLij is the poverty line
(in Rs. per capita per month) for the jth state for the ith period and PL1983j is the poverty
line of the jth state for 1983, then inflation and the inequality-adjusted average monthly
consumption expenditure for the jth state for the ith period (IIMPCEij) is expressed as
.7 The inflation- and inequality-adjusted MPCE of a state derived
in this manner is considered as an indicator of consumption ( ) for constructing
the HDI. This analysis has been carried out for the rural and urban areas of a state
separately.
The composite indicator on educational attainment (X2) is arrived at by considering
two variables, namely, the literacy rate for the age group of 7 years and above (e2),
and the adjusted intensity of formal education (e2). The idea is that the literacy rate,
being an overall ratio, may not alone reflect the actual scenario, and the drop-out rate
needs to be incorporated in the formula. The data on literacy rate has been considered
for three periods—1981, 1991 and 2001, which correspond to the Population Census.
The adjusted Intensity of Formal Education data is used for four periods—1978 (the
4th All-India Educational Survey: NCERT, 1982); 1993 (the 6th All-India Educational
Survey: NCERT, 1999), 2002 (7th All India Educational Survey: NCERT, 2002); and
2005-06. For 2005-06, the current analysis estimates the Intensity of Formal Education
(IFE) by using the data from NCERT (2002) and the Total Enrolment Figures as given
in Government of India (undated).8 Like the case of consumption, the entire analysis
has been carried out for rural and urban areas, separately. The estimation of the state-
wise population in the 6 to 18 year age group (rural and urban areas, separately)
has been taken from the data released by the Registrar General of India and Census
Commissioner (RGI & CC, 2006) for 2001. It needs to be mentioned here that RGI & CC
(2006) data does not provide population data for the 6-18 year age group for rural and
urban areas separately. Hence, we have used the rural and urban 6-18 year age group
population ratio in 2001 and estimated the state-wise projected rural and urban 6-18
year age group population for 2002 and 2005. The current analysis assigns a weightage
of 0.35 to e1 and of 0.65 to e2 to estimate X2, in line with the NHDR, 2001 methodology.
The Intensity of Formal Education (IFE) is the Weighted Average of Enrolment
(WAE) of students from class I to class XII (where weight 1 is assigned for Class I, 2
for Class II, and so on) expressed as percentage of Total Enrolment (TE) in Class I to
Class XII. The IFE is multiplied with the ratio of Total Enrolment (TE) to Population in
the age group 6-18 years (Pc) to get the Adjusted Intensity of Formal Education (AIFE)
(Government of India, 2002). According to the formula, suppose Ei be the number of
children (rural and urban areas combined) enrolled in ith standard in 2002 (i = 1 for
Class I to 12 for Class XII). Then the Weighted Average of the Enrolment (WAE) from
Class I to Class XII is calculated as the weighted average of enrolment (Ei) in the ith
class where the weights are i = 1 for Class I to 12 for Class XII.
Now, suppose Ei is the total enrolment of children from Class I to Class XII in 2002.
Then, the IFE for children (rural and urban areas combined) in 2002 becomes WAE
expressed as a percentage of TE. Suppose Pc represents the Population of Children
(rural and urban areas combined) in the age group 6 - 18 years in 2001. Then, the
Adjusted Intensity of Formal Education (AIFE) for children (for rural and urban areas
separately) in 2002 can be determined as the ratio of the IFE multiplied by TE and the
Population of Children in the age group of 6 - 18 years in 2001.9
Finally, the composite indicator on health attainment (X2) is determined by taking
into account two variables, namely, Life Expectancy (LE) at age one (h1), and the
inverse of Infant Mortality Rate (IMR) (h2). For h1, which measures the life expectancy
at age one (person), the four data periods considered for the current analysis are: 1981-
85 (for 1983), 1991-95 (for 1993-94), 2000-04 (for 1999-2000) and 2001-06 (for 2001-05).
For the first two periods, the data has been obtained from Government of India (2002),
while for the other two periods; the data have been taken from the Ministry of Health
and Family Welfare and the Office of the Registrar General of India (1999). The data
on IMR (per thousand) for rural and urban areas is considered for four data points,
namely, 1981 (for 1983), 1991 for (1993-94), 1999 for (1999-2000) and 2004 (for 2004-05).
The IMR data for 1981 and 1991 are taken from Government of India (2002), while the
other two data points have been taken from SRS Bulletins (RGI, 2001). The current
analysis assigns weightages of 0.65 and 0.35 to h1 and h2 respectively, to determine the
composite indicator (X3), in line with the NHDR 2001 methodology. Here again, the
analysis has been carried out for rural and urban areas, separately.
Economic Growth (EG)

In the current analysis, the EG is measured by the Per Capita Gross State Domestic
Product (PCGSDP) at constant (1999-2000) prices (comparable 1999-2000 series), as
reported by the database of the EPW Research Foundation (EPWRF, 2009). In order
to understand the size of the economy and growth pattern of each of the states, we
have classified them into three categories with respect to their PCGSDP at constant
prices in the following manner: high-income states (PCGSDP: greater than the 3rd
quartile), medium-income states (PCGSDP: 1st to the 3rd quartile) and low-income
states (PCGSDP: lesser than the 1st quartile).
In order to even out the yearly fluctuations in the per capita GSDP, the current
analysis considers the three years’ average per capita GSDP. For 1983, the average per
capita GSDP is the average for the period 1981-82 to 1983-84, for 1993, the same is the
average for the period 1992-93 to 1994-95, for 1999-2000, it is the average for the period
1998-99 to 2000-01, and for 2004-05, it is the average for the period 2003-04 to 2005-06.
IV. RESULTS AND POLICY OBSERVATIONS

The state-wise Consumption Index (X1), generated by following the methodology
described earlier, is depicted in Table 1. It can be observed from the table that Kerala,
Goa, Himachal Pradesh, Tamil Nadu and Gujarat are among the topper states in terms
of urban consumption in 2004-05, while Arunachal Pradesh, Bihar, Manipur and
Sikkim are placed at the bottom. The stark difference in terms of consumption pattern
within the states becomes quite clear from the table. For instance, in 2004-05, while
Arunachal Pradesh ranked 26th in terms of urban consumption, it was ranked 5th in
terms of rural consumption scores. On the other hand, during the same year, while
Tamil Nadu ranked 4th in terms of urban consumption, it was ranked 13th in terms
of rural consumption scores. The comparison of rankings of the states over the two
decades reveals that there has been a marked transformation in their relative position
over the period. For instance, while Kerala’s ranking has improved over the period
1983-2005, the same has deteriorated for the urban sector in Haryana.
Table 2 depicts the state-wise scenario for the Education Index (X2). Like the case
of consumption, a number of states have witnessed radically differing levels of success
in the urban and rural belts. For instance in 2004-05, Assam secured the 9th ranking in
terms of urban educational achievements, but it was placed in the 20th position in terms
of performance in the rural belt. On the whole, Mizoram, Kerala, Himachal Pradesh, and
Tripura are located among the toppers, while Uttar Pradesh (UP), Bihar, and Jammu and
Kashmir (J&K) are at the other end of the spectrum. Interestingly, it has been observed
that major states like Tamil Nadu slid down the ladder over the period 1983-2005.
Table 3 shows the state-wise Health Index (X3) for the four periods under
consideration. Intra-state divergence in terms of achievements is found to be the
defining feature on this front as well. For instance in 2004-05, while Gujarat ranked
23rd in terms of urban health achievements, it was ranked 12th in terms of rural health
scores. As regards the overall performance in 2004-05, it has been observed that Kerala,
Goa, and Punjab are among the toppers, while Chhattisgarh and Madhya Pradesh are
located at the bottom. By comparing the 1983 and 2004-05 performance of the states,
it can be observed that Himachal Pradesh and J&K have improved their performance
commendably, while Gujarat has witnessed a decline in terms of both rural and urban
rankings.
The overall HD scores for the states generated by following the above methodology
are presented in Table 4. It has been observed from the table that the HD level has been
consistently high for states like Kerala, Goa, Mizoram, and Himachal Pradesh, which
are otherwise also performing well in the constituent categories. On the other hand,
Chhattisgarh, Uttar Pradesh, Uttarakhand, Bihar, and Orissa have always remained
among the bottom liners. Some interesting movement across the states has been
noticed over the period of analysis. For instance, Punjab and Haryana started with an
appreciable HD scenario in 1983, but their performance in the urban areas declined
considerably during the last period. A similar worsening effect has been noticed for
Arunachal Pradesh at the bottom end of the spectrum as well. On the other hand,
J&K and West Bengal managed to improve their HD level to some extent over the
period. Interestingly, Jharkhand has shown a marked improvement in terms of HD
achievements in the urban belt after its separation from Bihar.
The changing income scenario across the states is explained with the help of
Table 5. The income quartiles during the years under observation are defined and
the states falling under different income categories during a particular period are
mentioned in the parentheses. It is observed from the table that while the states
of Punjab, Haryana, Goa, Gujarat and Maharashtra remained in the high-income
category throughout the period, the states of Bihar, Orissa and Uttar Pradesh have
stayed on the other extreme. States witnessing a growth in the service sector of late,
that is, Andhra Pradesh, Karnataka, Tamil Nadu and West Bengal are placed in the
middle-income category. The position of Kerala has been fluctuating between the
high and middle-income categories. A similar fluctuating trend between the low and
middle-income categories has been noticed for some North-eastern states as well. It
becomes evident that the liberalization exercise has affected the growth path of the
Indian states in markedly different manners. In particular, the literature suggests that
the economies relying more on a natural resource base have fared poorly (Bhandari
and Khare, 2002).
Before exploring the relationship between HD and EG, it would be relevant to
carry out a deeper analysis of the quality of income growth across Indian states. The
pertinent concern here is that the inequality in the growth process may adversely
influence the pace of HD formation in a particular state. Table 6 compares the HD
level of the states in the rural and the urban belts with the respective Gini ratios. It is
observed from the table that the rise in income level over the study period is associated
with a rise in inequality in the high-income states during the period 1983-1993 (for
both the rural and urban areas). For the high-income states, the inequality marginally
declined (for both the rural and urban areas) during 1993 to 1999-2000, but again went
up during the period 1999-2000 to 2004-05. Barring the urban areas under the low-
income states during the period 1993 to 1999-2000, the inequality (for both the rural
and urban areas) gradually declined during the period 1983 to 1999-2000. However,
urban inequality has been found to be rising for the low-income states during the
period 1993 to 1999-2000. For states within all income categories, for both rural and
urban areas, the inequality went up during the period 1999-2000 to 2004-05.12
A comparative analysis of Per Capita Social Expenditure (PCSE), Per Capita

Development Expenditure (PCDE) and tax-GSDP ratio of the states has also been
reported across income groups in Table 6, which is discussed in greater detail in the
following section.
The average HDI score of the states has been found to be significantly different
across various income categories. The existing literature suggests that the rising
inequality might affect the growth process and livelihood of the citizens of different
states differently, though the HD level has improved across all income groups. However,
Table 6
Average Per Capita GSDP and Average HDI Score across Income Groups
Year Criteria Low Middle High F-stat

Income Income Income
States States States
Mean PCGDP (Rs.) 7,008 9,858 14,163 29.354*
Mean PCSE (Rs.) 131 224 201 1.495
Mean PCDE (Rs.) 296 529 497 1.288
Mean Tax–GSDP Ratio (%) 4.02 4.90 5.72 1.102
1983 0.180
Mean Gini Ratio of Rural 0.272 0.279 0.266
MPCE (Rs.) Urban 0.307 0.299 0.284 0.292
Mean HDI Score Rural 0.134 0.297 0.464 6.541*
Urban 0.178 0.380 0.477 6.017*
Mean PCGDP (Rs.) 10,017 13,694 20,988 26.731*
Mean PCSE (Rs.) 643 1,019 811 1.079
Mean PCDE (Rs.) 1,145 2,026 1,604 1.245
Mean Expenditure on Health (as % of 15.9 17.6 16.7 1.042
Social Sector Expenditure)@
Mean Expenditure on Education (as 53.3 50.0 54.0 1.031
1993 % of Social Sector Expenditure)#
Mean Tax-GSDP Ratio (%) 4.27 4.44 6.97 3.559**
Mean Gini Ratio of Rural 0.238 0.241 0.279 2.150
MPCE (Rs.) Urban 0.284 0.284 0.320 1.085
Urban 0.223 0.363 0.507 4.774**
Mean PCGDP (Rs.) 11,654 16,597 27,546 21.519*
Mean PCSE (Rs.) 1,033 2,853 2,402 4.078**
Mean PCDE (Rs.) 1,717 5,178 4,548 3.731**
Mean Expenditure on Health (as % of 14.3 16.3 15.3 1.5453
Social Sector Expenditure)@
Mean Expenditure on Education (as 57.9 50.5 54.6 2.170
1999-2000 % of Social Sector Expenditure)#
Mean Tax-GSDP Ratio (%) 5.54 4.06 6.81 4.323**
Mean Gini Ratio of Rural 0.227 0.214 0.247 2.503
MPCE (Rs.) Urban 0.313 0.273 0.311 3.122***
Urban 0.180 0.408 0.471 8.278*
Year Criteria Low Middle High F-stat

Income Income Income
States States States
Mean PCGDP (Rs.) 13,289 20,711 33,773 31.065*
Mean PCSE (Rs.) 2,444 5,045 4,313 2.552***
Mean PCDE (Rs.) 3,997 8,888 7,409 2.135
Mean Expenditure on Health 13.6 14.1 14.1 0.0976
(as % of Social Sector Expenditure)@
2004-05 2.514
Mean Expenditure on Education 53.3 46.3 50.3
(as % of Social Sector Expenditure)#
Mean Tax-GSDP Ratio (%) 5.09 5.57 7.34 1.987
Mean Gini Ratio of Rural 0.24 0.25 0.30 4.633**
MPCE (Rs.) Urban 0.33 0.32 0.36 1.435
Urban 0.30 0.42 0.64 10.854*
Notes: Per Capita Social Expenditure (PCSE) and Per Capita Development Expenditure (PCDE) are at
current prices
@ - implies expenditure on health includes both revenue and capital expenditure on ‘Medical
and Public Health’ and ‘Family Welfare’
# - implies expenditure on education includes both revenue and capital expenditure on
‘Education, Sports, Art and Culture’
*, ** and *** - imply F-stat for Mean Equality Test is significant at 0.01, 0.05 and 0.10 level,
respectively
Source: Calculated by the authors on the basis of various data sources.
this improvement is not smooth. Understandably, the increase in the HDI score for the
low-income states over the period 1983 to 2004-05 has been moderate as compared to
the corresponding figures for the high-income states. For the middle-income states,
for both the rural and urban areas, the HDI score in 1993 was lower than that in 1983.
Interestingly, for the lower-income states, the HDI score in urban areas in 1999-2000 was
lower than that in 1993 and that for the high-income states; the HDI score for rural and
urban areas in 1999-2000 was lower than the corresponding figure in 1993.
Since 1993, the average expenditure on health as a percentage of social sector
expenditure has gone down continuously for all states (see Table 6). During the period
1993 to 1999-2000, the decline was much faster for the low-income states and during
the period 1999-2000 to 2004-05, the middle-income states registered the fastest decline.
The change in composition of social sector expenditure across states will be discernible
from the analysis of trends in average expenditure on education. The expenditure on
education and health together constitutes more than 70 per cent of the expenditure
on the social sector. Except for the low-income states, the share of expenditure on
education went down during the period 1993 to 2004-05. For the low-income states,
the share went up to 58 per cent during the period 1993 to 1999-2000 and then declined.
This falling share of expenditure on education and health could be a source of concern
for policy-makers.
Finally, in order to facilitate an understanding of the relationship between EG
and HD, a regression model has been estimated, involving the logarithm of the HDI
score as a dependent variable and the logarithm of the PCGSDP of the states as an
independent variable. The cross-section regressions have been separately estimated
for the four periods under study. In addition, separate regression models have also
been estimated to capture the rural-urban divergence.
It has been observed from the results reported in Table 7 that the process of HDI
formation in the states has been positively influenced by the growing income levels, as
reflected by the positive value and significance level of the coefficients of logarithms
of Per Capita GSDP for all the four periods, and for both the rural and urban areas.
However, a point of concern is that the value of the coefficients of the log (PCGSDP)
(which measures the income elasticity of human development), for both rural and
urban areas, has been declining over this period, with minor fluctuations. The result
implies that there is retardation in the pace at which the per capita income growth
(as an indicator of economic growth) is being translated into human well-being. The
obtained result in another way might signify the rising influence of other variables
in determination of the HD achievements of a state.13 The result indicates the need
for further investigation to determine the underlying factors (other than per capita
income), which might positively influence the HD achievements of a state. Another
interesting observation deserves special mention here. For all the four cross-sections
considered here, the income elasticity of human development has been found to be
higher for the rural areas vis-à-vis the urban areas. This implies that an increase in per
capita income results in higher human development in the rural areas as compared to
their urban counterparts, which clearly underlines the importance of income support
schemes like NREGA in accelerating the development process.
A second set of regression analyses has been undertaken involving the logarithm
of PCGSDP as a dependent variable and the logarithm of the HDI score of the
states as an independent variable, in order to facilitate an understanding of the
dependence pattern the other way round. The regression results reported in Table 8
clearly show that HD significantly influences the EG level of a state. An assessment
of the coefficients of the logarithmic transformation of HDI leads to the observation
that before 1999-2000, the HD elasticity of EG was smaller in the urban areas and
that the rural HD has been found to influence EG in a more significant manner as
compared to urban HD. However, in 2004-05, urban HD surpassed the rural HD
level in influencing EG. The larger influence of HD on EG during the recent period,
particularly in the urban areas, suggests that the investment in HD will have a
larger impact on EG, and hence the long-run implications of introducing various
programmes like the SSA, the National Urban Health Mission (NUHM), and the
Jawaharlal Nehru National Urban Renewal Mission (JNNURM) becomes all the
more important. In addition, the importance of focusing on rural reforms has been
clearly underlined and schemes like NRHM deserve mention here. In addition, the
provision of basic services through the implementation of schemes like JNNURM and
ensuring livelihood security through the proposed Food Security Act would ensure
that poor households would be able to devote resources for human development,
thereby contributing to the growth paradigm.
Table 7
Regression Results on the Relationship between HDI and PCGSDP
Dependent Variable: Log (Human Development Index Score)

1983 1993 1999-2000 2004-05
Independent Variable Rural Urban Rural Urban Rural Urban Rural Urban
Constant -19.724* -17.301* -15.901* -11.773* -13.835* -12.957* -10.889* -9.663*
(2.150) (5.274) (2.822) (4.169) (1.729) (3.952) (1.462) (1.820)
Log (Per Capita GSDP) 1.988* 1.737* 1.510* 1.103** 1.290* 1.209* 0.987* 0.882*
(0.229) (0.560) (0.289) (0.429) (0.178) (0.399) (0.147) (0.182)
Number of observations 28 28 28 28 28 28 28 28
2
R 0.622 0.241 0.356 0.150 0.648 0.337 0.587 0.540
Adjusted R2 0.607 0.212 0.331 0.117 0.634 0.311 0.571 0.522
Durbin–Watson statistic 2.142 1.667 2.24 1.471 1.847 1.75 1.859 1.541
F-statistic 42.724 8.256 14.372 4.591 47.828 13.192 36.927 30.53
Prob(F-stat) 0.000 0.008 0.001 0.042 0.000 0.001 0.000 0.000
Note: Figures in the parentheses show the White heteroscedasticity-consistent standard error for the
corresponding estimated coeffi cient
* and ** - imply that the estimate coeffi cient is significant at 0.01 and 0.05 levels, respectively.
Source: Estimated by the authors.
Table 8
Regression Results on the Relationship between PCGSDP and HDI
Dependent Variable: Log (Per Capita GSDP)

1983 1993 1999-2000 2004-05
Independent Variable Rural Urban Rural Urban Rural Urban Rural Urban
Constant 9.644* 9.375* 9.892* 9.711* 10.380* 10.067* 10.578* 10.486*
(0.090) (0.075) (0.117) (0.099) (0.145) (0.126) (0.145) (0.129)
Log (HDI Score) 0.313* 0.139* 0.236* 0.136* 0.502* 0.278* 0.595* 0.612*
(0.057) (0.043) (0.072) (0.067) (0.101) (0.100) (0.124) (0.137)
Number of observations 28 28 28 28 28 28 28 28
R2 0.622 0.241 0.356 0.150 0.648 0.337 0.587 0.540
Adjusted R2 0.607 0.212 0.331 0.117 0.634 0.311 0.571 0.522
Durbin–Watson statistic 2.151 2.26 1.987 1.983 1.581 1.628 1.377 1.428
F-Statistic 42.724 8.256 14.37 4.591 47.828 13.192 36.927 30.530
Prob(F-stat) 0.000 0.008 0.001 0.042 0.000 0.001 0.000 0.000
corresponding estimated coeffi cient.
* and ** - imply that the estimate coefficient is significant at the 0.01 and 0.05 levels, respectively.
The cross-state relationship between the HD achievements and EG during the

four periods under study is graphically represented in Figures 2-5 in the Appendix.
Each figure separately portrays the rural and urban scenarios during that particular
period. A couple of policy observations emerge from the figures. First, the positive
relationship between EG and HD has been observed during all the four periods under
consideration. Second, the relationship between EG and HD is non-linear in nature,
that is, the rising level of income is associated with a lesser degree of increase in terms
of HD achievements beyond a critical level. Third, interestingly, despite the rising
income inequality during the last period under consideration (2004-05), as reflected
in the divergence of the rural and urban curves, this non-linear structural relationship
does not undergo any significant transformation. Barring a few states, the urban HDI
score is generally higher than the rural HDI score for all the periods in the current
analysis. On one hand in the case of Goa, a high-income state, the rural HDI score has
been found to be higher than the urban HDI score for the years 1983, 1993 and 1999-
2000, but an opposite scenario emerges in 2004-05. On the other hand, for high-income
states like Punjab and Haryana (1999-2000, 2004-05), the rural HDI score is higher than
urban HDI score. A similar scenario has been observed for the middle-income states
like Kerala, Jammu & Kashmir and Andhra Pradesh (1993, 1999-2000) as well as the
low-income states like Uttar Pradesh and Uttarakhand.
The positive relationship between EG and HD, as observed from the current
analysis, holds important policy implications. Since the mid-1990s, the Indian economy
has undergone a structural transformation, with the contribution of the services sector
in India’s GDP increasing continuously. It is, in fact, the growth of the services sector
which has fuelled the economic growth process over the last decade. The growth in the
two major components of HD, namely, health and education, has been contributing to
the growth path in two ways: on one hand, these components form part of the services
sector, and on the other hand, a healthy and educated population stands to augment
the GDP in a more productive manner, not only in the services sector but also within
the agriculture and manufacturing segment. The current analysis establishes that EG
and HD levels in India are positively related, and vice versa. While the observation
implies that the HD formation process resulting from the rising income level in the
current period would continue to provide a growth impetus during the subsequent
period, the rising inequality level during the recent period remains a major area of
concern. The gradual weakening of the elasticity coefficient needs to be particularly
noted in this regard.
On the policy front, in order to maintain the current level of EG–HD interlinkage,
the government, therefore, needs to ensure a balanced growth process across the states
on one hand, and must try to bridge the gap between the rural and urban areas within
a state, on the other. Only then would the benefits of the EG and HD augmentation
process cumulatively lead to sustainable economic development in the country.
Last but not the least, the role of governance and institutions is important for
economic growth to translate into economic development. There are several routes
through which economic growth could influence economic development, but the most
obvious route wherein government policies and institutions could play an important
role is through economic growth, tax revenue generation of the governments, and
expenditure on the social sector and developmental activities. Higher economic growth
is expected to result in larger tax revenue generations for the state governments,
which could provide larger fiscal space for state governments to spend on social sector
programmes and developmental activities. It can be predicted that states having a
higher tax-GSDP ratio have larger fiscal space to translate economic growth into
economic development. However, larger fiscal space (in terms of own tax revenue as
percentage of GSDP) of the states does not necessarily ensure that it would be spent
on social or developmental activities. Therefore, achieving a high HD would remain
a distant dream for the states wherein the larger fiscal space is not channelized into
social and developmental expenditures. The composition of social and developmental
expenditure is also important, which could vary from state to state, depending on
their level of HD achievement. Moreover, states having larger outstanding debt
encounter eroded fiscal space as a substantial part of its revenue goes to debt-financing
(Chakraborty, et al., 2010). Understandably, it is the low per capita income states that
have larger outstanding public debts as compared to the high- and middle-income
states (Chakraborty, et al., 2009). Apart from the state governments’ expenditure on
social sectors, there are several Centrally-sponsored schemes on the social sectors which
could help substantially in converting economic growth into economic development.
A recent study shows that the transfer of funds under Centrally-sponsored schemes
to states is regressive (Chakraborty, et al., 2010). As a result, in the absence of grant of
adequate fiscal space to the states, it would be over-ambitious to expect an automatic
translation of economic growth into economic development. The future policies of the
government need to factor in this perspective in their initiatives.
The above point can be stressed with the estimates of the tax-GSDP ratio of the
states, as reported in Table 6. The statistics are calculated on the basis of the average
Own Tax Revenue and GSDP of the states. As in the case of income, for 1983, we have
taken the average of 1981-82 to 1983-84, for 1993, an average of 1992-93 to 1994-95; for
1999-2000, an average of 1998-99 to 2000-01, and for 2004-05, an average of 2003-04 to
2005-06. Across all the periods, both the PCSE and PCDE are higher for the middle-
income states as compared to the other two categories of states. During the period
1983 to 2004-05, the PCSE went up for the low-, middle- and high-income states by
19 times, 23 times, and 22 times, respectively. For the same period, the PCDE went
up for the low-, middle- and high- income states by 14 times, 17 times, and 15 times,
in that order. From 1983 to 2004-05, the own tax revenue as a percentage of the GSDP
went up by 1.5 times for both low- and high-income states and for middle-income
states, the corresponding figure was 1.2 times. However, as compared to the high-
income states, the increase in the tax-GSDP ratio for the low-income states was not
smooth. This increase was 5.54 per cent in 1999-2000 but decelerated to 5.09 per cent
in 2004-05. For the middle-income tax states, on the other hand, the tax-GSDP ratio
declined continuously till 1999-2000, but registered a gain in 2004-05. In 2004-05, both
the middle- and high-income states registered an increment in the tax-GSDP ratio; but
in the low-income states, this figure declined. Overall, the middle and high-income
states currently have a larger tax-GSDP ratio. Clearly, greater government assistance
to the lower-income states is required, given their lower tax-GSDP ratio as well as a
lesser increase in PCDE and PCSE.
The relationship between HDI and PCDE and PCSE is next explored empirically.
The Reserve Bank of India (RBI) provides state-wise data on the Per Capita Development
Expenditure (PCDE)14 and Per Capita Social Expenditure (PCSE)15 at current prices.
The data on average per capita expenditures is available for the periods 1980-85,
1990-95, 2000-05 and 2005-10. The current study considers the data corresponding
to the periods 1980-85, 1990-95, 2000-05 and 2005-10 as representatives of the years
1983, 1993, 1999-2000 and 2004-05, respectively. In order to bring the expenditures at
constant prices (1999-2000 prices), the price deflators for the states are derived on the
basis of their GSDP data available for constant and current prices (1999-2000 series)
from EPWRF.16 For each of the states, the derived price deflator is multiplied by the
average per capita expenditure to obtain the per capita expenditures at 1999-2000
prices, which is then used in the following regression models.
In order to understand the impact of per capita development and social expenditure
on human development, the current analysis has estimated regression models by
considering the logarithm of the Human Development Index Score as a dependent
variable and the logarithm of per capita development expenditure (alternatively, social
expenditure) as an independent variable separately. The results obtained are presented
in Tables 9 and 10, respectively. The results indicate that the association between per
capita development/social expenditure and human development was strong during
the early 1980s and 1990s, but the same became weaker during the last decade. It has
also been observed that PCSE had a larger impact on human development as compared
to PCDE in all cases. However, the association between per capita development/social
expenditure and achievement in human development was stronger in urban areas as
compared to rural areas [as is evident from the higher coefficient term for urban log
(PCDE) and log (PCSE) as compared to the rural areas]. There was a sharp de-linking
between per capita development/social expenditure and achievement in human
development in urban areas during the 2000s. Unlike per capita income and human
development, the results of per capita expenditure and human development show a
different picture—the association between per capita expenditure and achievement
in HD is much stronger in the urban areas. It can, therefore, be concluded that during
the 1990s, both development and social expenditures had larger impacts on the HD
achievements as compared to 1980s and 2000s. The declining share of health and
education in social sector expenditure could be the reason for the reduction in the
impact on the HD achievements. However, on the policy front, the lower value of
the expenditure coefficients in the rural areas indicates the presence of a vicious cycle
mentioned in the literature review, owing to the lower initial HD scenario and other
bottlenecks, which deserve immediate government attention.
The final analysis focuses on the relationship between the log of PCDE and the
log of PCSE with the tax-GSDP ratio, as reported in Table 11. The negative coefficient
observed in all the cases implies that an increase in the tax-GSDP ratio may not directly
lead to increased PCSE and PCDE. This virtually means that as per the results, the
larger fiscal space is not being translated into higher spending on the social sectors,
Table 9
Regression Results on the Relationship between HDI and PCDE

1983 1993 1999-2000 2004-05
Rural Urban Rural Urban Rural Urban Rural Urban
Constant -5.576* -6.572** -6.147* -7.367* -5.174 -6.873* -4.000* -2.903**
(1.646) (2.933) (1.533) (1.968) (1.346) (1.96) (1.162) (1.372)
Log (PCDE) 0.550** 0.701*** 0.598* 0.785* 0.486 0.710* 0.350** 0.240
(0.217) (0.378) (0.192) (0.239) (0.168) (0.236) (0.135) (0.161)
No. of Observations 25 25 28 28 28 28 28 28
R2 0.158 0.119 0.241 0.328 0.281 0.354 0.206 0.112
Adj. R2 0.121 0.081 0.211 0.302 0.253 0.329 0.175 0.077
D-W Stat 2.148 1.801 2.457 1.755 2.117 1.906 2.203 1.916
F-Stat 4.305 3.105 8.239 12.706 10.157 14.262 6.728 3.265
Prob (F-stat) 0.049 0.091 0.008 0.001 0.004 0.001 0.015 0.082
*, ** and *** - imply that the estimate coeffi cient is significant at the 0.01, 0.05 and 0.10 levels,
respectively.
Table 10
Regressixon Results on the Relationship between HDI and PCSE

1983 1993 1999-2000 2004-05
Rural Urban Rural Urban Rural Urban Rural Urban
Constant -6.307* -7.67** -6.26* -7.866* -5.289* -7.346* -4.365* -3.409**
(1.643) (3.288) (1.378) (2.008) (1.29) (2.099) (1.174) (1.539)
Log (PCSE) 0.733* 0.959*** 0.666* 0.924* 0.538* 0.827* 0.418** 0.319
(0.247) (0.485) (0.186) (0.266) (0.173) (0.273) (0.146) (0.193)
No. of
Observations 25 25 28 28 28 28 28 28
R2 0.239 0.19 0.242 0.369 0.289 0.403 0.214 0.144
Adj. R2 0.205 0.155 0.213 0.344 0.262 0.381 0.184 0.111
D-W Stat 2.079 1.746 2.403 1.721 2.056 1.815 2.172 1.824
F-Stat 7.204 5.396 8.314 15.184 10.58 17.587 7.091 4.383
Prob (F-stat) 0.013 0.029 0.008 0.001 0.003 0 0.013 0.046
* and ** - imply that the estimate coefficient is significant at the 0.01 and 0.05 levels, respectively.
Table 11
Regression Results on the Relationship between Tax-GDP Ratio and PCSE and PCDE
Dependent Variable LPCSE

Independent Variables 1983 1993 1999-2000 2004-05
Constant 7.168* 7.868* 8.127* 8.584*
(0.256) (0.123) (0.125) (0.22)
LTGDP -0.429* -0.499* -0.456* -0.444*
(0.133) (0.087) (0.095) (0.141)
No. of observations 25 28 28 28
Adj. R2 0.169 0.401 0.260 0.151
D-W stat 1.716 1.664 2.006 2.07
F-stat 5.876 19.094 10.482 5.811
Prob(F-stat) 0.024 0.000 0.003 0.023
Dependent Variable LPCDE
Independent Variables 1983 1993 1999-2000 2004-05
Constant 7.909* 8.548* 8.729* 9.277*
(0.253) (0.115) (0.142) (0.274)
LTGDP -0.362* -0.537* -0.483* -0.565*
(0.128) (0.085) (0.105) (0.167)
No. of observations 25 28 28 28
Adj. R2 0.123 0.397 0.27 0.216
D-W stat 1.968 1.666 1.95 1.992
F-stat 3.239 17.101 9.628 7.176
Prob(F-stat) 0.085 0.000 0.005 0.013
* - implies that the estimate coefficient is significant at the 0.01 level.
which is a matter of serious concern because the HD–PCSE and HD–PCDE linkages,
as observed in Tables 10 and 11, are not being recognized in the governance pattern.
Therefore, the state governments need to urgently acknowledge the underlying
relationship between development expenditures and human development, on one
hand, and the relationship between human development and economic growth, on the
other. Overdependence on Centrally-sponsored social schemes for tackling poverty-
related problems would otherwise weaken HD formation and consequently the very
process of economic development.
ACKNOWLEDGEMENTS
The authors are sincerely grateful to two anonymous referees for their suggestions. They are,
however, fully responsible for all remaining errors. The views expressed in the paper are
personal and do not reflect the official policy or position of the respective organizations of the
authors.
NOTES
1. See Ministry of Health and Family Welfare (undated).
2. Chamarbagwala (2010) has noted that the urban–rural gap in terms of returns to all levels of
education has widened substantially for the bottom four quintiles but turned increasingly
negative for the top quintile.
3. For instance, Anand and Sen (2000) have noted the need to understand the relationship between
HD and economic sustainability, by focusing on the provision of cleaner environment for the
citizens.
4. The regression results on the relationship between HD and corruption confirm the presence
of non-linearity and suggest that with a decline in corruption, the HD level rises, but declines
marginally for a few countries characterized by a less corrupt regime (Mukherjee and
Chakraborty, 2010a; 2010b).
5. It, however, deserves mention that the UNDP methodology, selected for measuring the HDI
score of the countries, has been subject to criticism from time to time (Sagar and Najam, 1998)
and alternate indices have been proposed (Nagar and Basu, 2001).
6. It needs to be noted that the alternate index developed by Guha and Chakraborty (2003), in line
with the methodology adopted by Nagar and Basu (2001), however, showed that inclusion of
other socio-economic variables changes the state rankings to some extent.
7. State-specific poverty lines for the three periods (1983, 1993-94 and 1999-2000) have been taken
from Government of India (2002), while for 2004-05, the estimates provided by Himanshu (2009)
were referred to.
8. For 2005-06, the current analysis has estimated the adjusted intensity of formal education as on
30 September 2005.
9. For mathematical expression of the estimation process, see Mukherjee and Chakraborty (2009)
10. Where X2=0.65*AIFE+0.35*LR (>7 Yr).
11. Where X3=0.65*LE@Birth+0.35*(1/IMR).
12. There are states with a higher Gini Ratio and a lower HDI score (for example, Chhattisgarh
and Uttar Pradesh) and a lower Gini Ratio and higher HDI score (for example, Mizoram and
Nagaland).
13. For instance, Mishra and Patra (2009) identify indicators like the size of the economy, population,
physical infrastructure, agro-climatic conditions etc. as important indicators that influence the
socio-economic dimensions of human development.
14. For details, see http://www.rbi.org.in/scripts/PublicationsView.aspx?id=12173, Accessed on 25
November 2010.
15. For details, see http://www.rbi.org.in/scripts/PublicationsView.aspx?id=12175, Accessed on 25
November 2010.
16. Price Deflator for a state = GSDP at 1999-2000 Prices / GSDP at Current Prices.
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APPENDIX
Figure 2
Relationship between HDI and PCGSDP across Indian States (1983)
Source: Generated by the authors.
Figure 3
Relationship between HDI and PCGSDP across Indian States (1993)

Figure 4
Relationship between HDI and PCGSDP across Indian States (1999-2000)
Figure 5
Relationship between HDI and PCGSDP across Indian States (2004-05)

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Indian Journal of Human Development, Vol. 5, No.

Is There Any Interdependence between

Sacchidananda Mukherjee and Debashis Chakraborty*

Th is pape r atte m pts to anal yse th e evol

K e yw ords: Econom ic grow th , H um an deve l

ECONOMIC GROWTH AND HUMAN DEVELOPMENT

Source: Generated by the authors on the basis of UNDP (2009) data.

METHODOLOGY AND DATA

Human Development Index (HDI)

Economic Growth (EG)

IV. RESULTS AND POLICY OBSERVATIONS

A comparative analysis of Per Capita Social Expenditure (PCSE), Per Capita

Year Criteria Low Middle High F-stat

Year Criteria Low Middle High F-stat

Dependent Variable: Log (Human Development Index Score)

Dependent Variable: Log (Per Capita GSDP)

The cross-state relationship between the HD achievements and EG during the

Dependent Variable: Log (Human Development Index Score)

Dependent Variable: Log (Human Development Index Score)

Dependent Variable LPCSE

Source: Generated by the authors.

Source: Generated by the authors.

Source: Generated by the authors.

Source: Generated by the authors.

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