‘District domestic product’ is calculated with a top-down approach. For reliable, robust data, what’s needed is a bottom-up approach
Ashish Kumar and Shraiya Pant | June 15, 2023
India is one of the most diverse countries with a huge cultural, religious, racial and geographical diversity and pluralism. These are its strategic assets as well as challenges. As India is moving towards becoming a developed economy by 2047, the challenges of effective governance are getting amplified with such a diverse population. The diversity also results in difficulty in implementation of uniform laws and regulations. Moreover, planning and implementation of national level schemes at sub-national levels also require taking care of regional and local specificities. Effective development plans at various levels are prerequisite to achieve the vision 2047.
The concept of grassroot level planning is not new to India. Under Article 243G and Article 243W, panchayats and urban local bodies are constitutionally mandated to prepare their development plans through participation of people. Moreover, under Article 343ZD district planning committees are mandated to prepare district development plans. The 73rd and 74th constitutional amendments were brought to focus on better planning at grassroot level. Unfortunately, most of the attempts to prepare effective plans at the district level and below met with limited success due to inadequate data and its effective use in the process of planning.
A comprehensive economic indicator for making effective plans at the district level is ‘district domestic product’ (DDP) which is either not being estimated by many states or is being estimated by a methodology which does not fully capture the production of all goods and services at the district level. Accurate estimates of DDP would also be helpful in preparation of a district vision leading to preparation of effective district development plans.
In recent times, the focus of the Government of India has been shifting towards district-led planning. During the second National Conference of the Chief Secretaries in January 2023, prime minister Narendra Modi pushed forward the agenda of ‘District as Fulcrum of Development’ and asked the chief secretaries to make districts the focal point of administration. The chief secretaries have been asked to implement the model of decentralisation of power at the district level. The chief minister of Assam has already conducted a deputy commissioners’ conference and asked the DCs to measure GDP at the district level. The government of Goa has launched the district panchayat development plan that aims to bring the state closer to planning at village and taluka level.
The existing methodology for the estimation of DDP follows a top-down approach, where the estimates are drawn up at the national level (GDP), and then apportioned to the states (GSDP), and subsequently to districts (DDP). First the GDP is measured following the international standards using the System of National Accounts (SNA 2008). Thereafter, GSDP is computed by the states using basic data available for the primary sectors at the district level, such as agriculture, horticulture, fisheries, animal husbandry, mining etc. and allocation of value addition of a state for manufacturing and services sectors from the data available at the level of the central government using some indicators. DDP is compiled by some states employing a similar process by using primary sector data available at the district level and allocation of state level value addition estimates for manufacturing and services sectors to districts using some indicators.
Even primary sector estimates are also not very reliable at the district level. For example, the contribution of the agriculture sector at district level is based on two measures: (a) the area under a crop and (b) the yield of each crop per hectare. Area estimates of various crops are provided from the records maintained by the revenue officials at the village level (patwari). Many times patwaris fail to conduct field visits and provide not the latest updated information in khasra register and hence unable to provide correct area estimate of each crop. Further, yield estimates are also not fully reliable at the district level due to a smaller number of crop-cutting experiments carried out in a district and also selection of plots being based on the poorly updated records by patwaris. Methodology for collection of data for horticulture, floriculture, dairy and other animal products like eggs and meats is not streamlined. Also, district level estimates of forest products are difficult to generate till methodology suitable to local conditions is evolved.
Due to the small sample size at the district level, it is not possible to obtain reliable estimates for the organised manufacturing sector from the Annual Survey of Industries, organised services from the Annual Survey of Services Sector and for unorganised manufacturing and services sectors from once-in-five-year surveys conducted by the National Sample Survey Organisation (NSSO). These and many other issues create difficulty in proper estimation of DDP.
Accurate estimation of DDP is essential to measure the economic growth of districts and hence average standard of living of its inhabitants. Per capita district income is one of the most important indicators for constructing the Human Development Index (HDI). Since districts are the pivot of the planning process, state governments should lay emphasis on collection of data at the district level and its use to measure the district income for preparation of effective plans. The flaws in the DDP estimation need to be addressed by adopting a more robust scientific methodology and full use of the data getting generated at the district level especially due to increasing digitisation. There is also a need for adopting satellite data and digital technology for collection of latest and concurrent data. Reliable and robust estimation of DDP shall result in adoption of a bottom-up approach for estimation of GSDP and GDP at state and national level.
Ashish Kumar is Former Director General, Ministry of Statistics & Programme Implementation, and Distinguished Fellow, Pahle India Foundation. Shraiya Pant is Research Associate, Pahle India Foundation. Views expressed are personal.
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