Ranking of States by Raghuram Rajan

by Marathadi-Saamiyaar Fri Sep 27, 2013 12:20 am

...as in any ranking, the surveyors criteria are important and always questionable...

The news media is gleeful that Gujarat is a "less developed" state but fail to mention that it is in the same league as Karnataka and Andhra. If that is a blot on Modi, then what should one say about the Nehru clan as their home state Uttar Pradesh is "least developed" and India is still one of least developed countries on anyone's ranking on most areas after 60 years of CONmen rule.

A state like TN with 20 hr power cuts and 10 month water shortage is a relatively "developed" state, there cant be much hope for India.

by Idéfix Fri Sep 27, 2013 2:02 am

Ten years ago, Gujarat had a significant lead on HDI over Karnataka. Rajan's new development index is strongly correlated with HDI, and Karnataka has overtaken Gujarat during the last decade.

by SomeProfile Fri Sep 27, 2013 3:24 pm

Idéfix wrote:Ten years ago, Gujarat had a significant lead on HDI over Karnataka. Rajan's new development index is strongly correlated with HDI, and Karnataka has overtaken Gujarat during the last decade.

Let's be honest. Regardless of what this questionable report says, do you think that Karnataka has in reality overtaken Gujarat in HDI in the last decade? A decade in which the leaders of the former state were too busy trying to enrich themselves and protect their political power, while the leader of the latter state was too busy working on developing his state? If you really believe that Karnataka has truly overtaken Gujarat in HDI in the last decade, you are smoking something or deliberately choosing to be dishonest due to your opposition to Modi.

I can to some extent respect principle-based opposition to Modi (even if there are only weak facts to back that up), but choosing to be intellectually dishonest like this is a pathetic low.

by Idéfix Fri Sep 27, 2013 3:53 pm

SomeProfile wrote:
Idéfix wrote:Ten years ago, Gujarat had a significant lead on HDI over Karnataka. Rajan's new development index is strongly correlated with HDI, and Karnataka has overtaken Gujarat during the last decade.
Let's be honest. Regardless of what this questionable report says, do you think that Karnataka has in reality overtaken Gujarat in HDI in the last decade? A decade in which the leaders of the former state were too busy trying to enrich themselves and protect their political power, while the leader of the latter state was too busy working on developing his state? If you really believe that Karnataka has truly overtaken Gujarat in HDI in the last decade, you are smoking something or deliberately choosing to be dishonest due to your opposition to Modi.

I can to some extent respect principle-based opposition to Modi (even if there are only weak facts to back that up), but choosing to be intellectually dishonest like this is a pathetic low.

So a composite index of data based on field observations does not match your political opinions. What do you do? Dismiss the data, and call anyone who cites the data "intellectually dishonest." See the problem here?

Rajan's new index is not rocket science. It is a restatement of HDI. HDI range of Indian states is between 0.3 and 0.6. This new index spaces them out between 0.05 and 0.80. A more dispersed index is better for the purpose for which it was designed: as a multiple for resource allocation. And it is negatively correlated, because the higher the score, the more backward a state is and therefore needs more assistance.

by Seva Lamberdar Fri Sep 27, 2013 4:47 pm

Idéfix wrote:
SomeProfile wrote:
Idéfix wrote:Ten years ago, Gujarat had a significant lead on HDI over Karnataka. Rajan's new development index is strongly correlated with HDI, and Karnataka has overtaken Gujarat during the last decade.
Let's be honest. Regardless of what this questionable report says, do you think that Karnataka has in reality overtaken Gujarat in HDI in the last decade? A decade in which the leaders of the former state were too busy trying to enrich themselves and protect their political power, while the leader of the latter state was too busy working on developing his state? If you really believe that Karnataka has truly overtaken Gujarat in HDI in the last decade, you are smoking something or deliberately choosing to be dishonest due to your opposition to Modi.

I can to some extent respect principle-based opposition to Modi (even if there are only weak facts to back that up), but choosing to be intellectually dishonest like this is a pathetic low.
So a composite index of data based on field observations does not match your political opinions. What do you do? Dismiss the data, and call anyone who cites the data "intellectually dishonest." See the problem here?

Rajan's new index is not rocket science. It is a restatement of HDI. HDI range of Indian states is between 0.3 and 0.6. This new index spaces them out between 0.05 and 0.80. A more dispersed index is better for the purpose for which it was designed: as a multiple for resource allocation. And it is negatively correlated, because the higher the score, the more backward a state is and therefore needs more assistance.

Is there a criterion or consideration in the report which looks at the causes of backwardness for the state before Govt. throws in good money in a bad and incorrigible situation, proverbially like wasting pearls on a swine?

by Idéfix Fri Sep 27, 2013 5:24 pm

Seva Lamberdar wrote:
Idéfix wrote:
SomeProfile wrote:
Idéfix wrote:Ten years ago, Gujarat had a significant lead on HDI over Karnataka. Rajan's new development index is strongly correlated with HDI, and Karnataka has overtaken Gujarat during the last decade.
Let's be honest. Regardless of what this questionable report says, do you think that Karnataka has in reality overtaken Gujarat in HDI in the last decade? A decade in which the leaders of the former state were too busy trying to enrich themselves and protect their political power, while the leader of the latter state was too busy working on developing his state? If you really believe that Karnataka has truly overtaken Gujarat in HDI in the last decade, you are smoking something or deliberately choosing to be dishonest due to your opposition to Modi.

I can to some extent respect principle-based opposition to Modi (even if there are only weak facts to back that up), but choosing to be intellectually dishonest like this is a pathetic low.
So a composite index of data based on field observations does not match your political opinions. What do you do? Dismiss the data, and call anyone who cites the data "intellectually dishonest." See the problem here?

Rajan's new index is not rocket science. It is a restatement of HDI. HDI range of Indian states is between 0.3 and 0.6. This new index spaces them out between 0.05 and 0.80. A more dispersed index is better for the purpose for which it was designed: as a multiple for resource allocation. And it is negatively correlated, because the higher the score, the more backward a state is and therefore needs more assistance.
Is there a criterion or consideration in the report which looks at the causes of backwardness for the state before Govt. throws in good money in a bad and incorrigible situation, proverbially like wasting pearls on a swine?

Yes.

From page iii:

The level of development of a state is likely to be the consequence of a complex set of historical, cultural, and sociological factors. Additional financial resources may be helpful in increasing growth rates, but the ability to use these resources well is probably most important in distinguishing regions that develop successfully and those that do not. Therefore, any scheme of allocation should take into account both development needs as well as past performance, with the latter serving both to incentivize better performance and to allocate resources where they can be most effectively used.

by Petrichor Fri Sep 27, 2013 5:33 pm

Idefix, have you addressed the points made by the article

http://articles.economictimes.indiatimes.com/2013-06-29/news/40271917_1_narendra-modi-gujarat-miracle-modi-critics

in any of your previous posts about Modi?

Specifically, the purpose of showcasing the Gujarat economic model for the country (as a whole) as opposed to say, any of the other big states? Also, are you holding UPA (at the national and states level where they are in power) to the same high standards of human development that you are subjecting Gujarat to?

by Idéfix Fri Sep 27, 2013 5:46 pm

I already have. In my view, comparison of economic performance is not predicated on whether the leader who presided over that performance is interested in higher office. I compared Modi's performance in Gujarat on three indicators -- GDP, HDI, and inequality -- with that of other large states. The summary is:

GDP: ahead of, but within rounding error of, other comparable states. Behind Chimanbhai Patel's record in Gujarat.
HDI: behind many large states, despite the slight GDP lead (income is one of the metrics in HDI)
Inequality: behind southern states and Maharashtra.

I subjected UPA's performance to similar analysis:

GDP: behind China, but ahead of all other comparable countries. Gap with China is smaller than before. Faster growth than under NDA.
HDI: ahead of all comparable countries other than Bangladesh. Higher percentage improvement than China
Inequality: worse than NDA performance, larger gaps in growth rates between poor and middle class, and middle class and rich.

Finally, the primary argument in the article you posted is, "the CMs of other states are not running for PM." That is true, but it does not mean that Gujarat made the most progress in the time period in question. The fact that the other states' often-larger achievements are considered normal enough that their CMs are not projected as miracle workers shows that the Modi record is more PR than facts.

by Idéfix Fri Sep 27, 2013 7:15 pm

Here is a new blog that provides more detailed analysis for the above summary: http://vivechana.chaikaapi.com/

The posts that I made on SuCH were made when I was still doing the analysis, so they are harder to read and get a synthesis of my argument. This blog pulls together all the analysis, and maintains a consistent set of comparables (i.e. nine other large states of India to compare Gujarat to, and ten other countries to compare India to) across the different analyses.

by Petrichor Fri Sep 27, 2013 8:15 pm

Good luck and best wishes with vivechana. I hope people like 'Dirk' would post substantive arguments and the quality of debate is high. I like the 'open sourcing' format with replicable analysis.

by rawemotions Fri Sep 27, 2013 10:40 pm

Marathadi-Saamiyaar wrote:

...as in any ranking, the surveyors criteria are important and always questionable...

The news media is gleeful that Gujarat is a "less developed" state but fail to mention that it is in the same league as Karnataka and Andhra. If that is a blot on Modi, then what should one say about the Nehru clan as their home state Uttar Pradesh is "least developed" and India is still one of least developed countries on anyone's ranking on most areas after 60 years of CONmen rule.

A state like TN with 20 hr power cuts and 10 month water shortage is a relatively "developed" state, there cant be much hope for India.

Actually there is a reason to suspect that the mandarins who did the report did not have a free hand. The weightages could have been tinkered to "entice" BJD from not joining NDA. Until now BJD had been cribbing that Congress is bestowing favors to JD(u) but leaving Orissa out in the cold. Now JD(u) has taken the bait, next one to go after is BJD. With BJD now given the last position, any backward state status is guaranteed for BJD.

So, at least part of the report is about using public money in a selective manner to "entice" parties to support congress seems to the new MO, along with selective use of CBI. The Institutions themselves be damned!

by Seva Lamberdar Sat Sep 28, 2013 10:14 am

Idéfix wrote:
Seva Lamberdar wrote:
Idéfix wrote:
SomeProfile wrote:
Idéfix wrote:Ten years ago, Gujarat had a significant lead on HDI over Karnataka. Rajan's new development index is strongly correlated with HDI, and Karnataka has overtaken Gujarat during the last decade.
Let's be honest. Regardless of what this questionable report says, do you think that Karnataka has in reality overtaken Gujarat in HDI in the last decade? A decade in which the leaders of the former state were too busy trying to enrich themselves and protect their political power, while the leader of the latter state was too busy working on developing his state? If you really believe that Karnataka has truly overtaken Gujarat in HDI in the last decade, you are smoking something or deliberately choosing to be dishonest due to your opposition to Modi.

I can to some extent respect principle-based opposition to Modi (even if there are only weak facts to back that up), but choosing to be intellectually dishonest like this is a pathetic low.
So a composite index of data based on field observations does not match your political opinions. What do you do? Dismiss the data, and call anyone who cites the data "intellectually dishonest." See the problem here?

Rajan's new index is not rocket science. It is a restatement of HDI. HDI range of Indian states is between 0.3 and 0.6. This new index spaces them out between 0.05 and 0.80. A more dispersed index is better for the purpose for which it was designed: as a multiple for resource allocation. And it is negatively correlated, because the higher the score, the more backward a state is and therefore needs more assistance.
Is there a criterion or consideration in the report which looks at the causes of backwardness for the state before Govt. throws in good money in a bad and incorrigible situation, proverbially like wasting pearls on a swine?
Yes.

From page iii:

The level of development of a state is likely to be the consequence of a complex set of historical, cultural, and sociological factors. Additional financial resources may be helpful in increasing growth rates, but the ability to use these resources well is probably most important in distinguishing regions that develop successfully and those that do not. Therefore, any scheme of allocation should take into account both development needs as well as past performance, with the latter serving both to incentivize better performance and to allocate resources where they can be most effectively used.

That is too vague in assessing the accountability / potential of aid recipients. Where is the direct advice / pre-condition to people in the report to put their own house in order before seeking aid from Govt.?

by Seva Lamberdar Sat Sep 28, 2013 1:41 pm

"For the theoretical base for the choice of indicators of backwardness, it was rightly agreed in the beginning that the chosen indicators should all be 'outcome' variables, not background or process variables. However, in spite of this decision, 'Percentage of SC/ST Population' was chosen as one of the variables, which certainly is not an outcome variable. The understandable disadvantage of a State, because of a higher percentage of SC/ST in its population, is adequately captured in the remaining variables. I had, therefore, expressed my reservation about inclusion of this variable, but had later agreed to it when the results of the Principal Component Analysis (PCA) were not available to us. It now emerges that it has a factor loading of only 0.02 in the PCA, and hence is not worthy of inclusion in the index. The results of PCA provides justification to my initial reservation.... "

Ref. ... http://www.finmin.nic.in/reports/Report_CompDevState.pdf
(page 49)

>>> This report is a proof that caste based reservations / quotas in education and jobs, including to SCs/STs, have no justification.

by Petrichor Sat Sep 28, 2013 3:30 pm

Idéfix wrote:Here is a new blog that provides more detailed analysis for the above summary: http://vivechana.chaikaapi.com/

The posts that I made on SuCH were made when I was still doing the analysis, so they are harder to read and get a synthesis of my argument. This blog pulls together all the analysis, and maintains a consistent set of comparables (i.e. nine other large states of India to compare Gujarat to, and ten other countries to compare India to) across the different analyses.

I showed the blog to a friend of mine versed in Economics and he had the following points to make:

1. The basic premise by considering income, inequality and hdi is a good start but by no means is it a full picture for comparison purposes. Absolute levels matter and growth from a larger base is more difficult to achieve than from a lower base.
2. The author could have looked at qualitative factors that is earning kudos from the business lobby and international press - these are reductions in corruption levels, higher bureaucratic efficiencies etc. These factors do not necessarily show up in short-term reviews but have longer-term effects.
3. The author could have looked at the recent downturn in the Indian economy (since 2008) and done a year-on-year comparison with how Gujarat fared when the rest of the states were hitting roadblocks. It is easy to show a good report and averages in boom years but difficult to prove how well a state weathers storms.
4. The overall tone of the blog is NOT that of a neutral economist but sounds like someone with an agenda.
5. Fuller analysis of the state's performance done by people like Jagdish Bhagwati cannot be easily trifled with, using this level of basic selective cherry picking analysis.

I realize it is a little unfair when specific rebuttals are not provided but just wanted to lay it out there for you to make improvements.

by Marathadi-Saamiyaar Sat Sep 28, 2013 3:40 pm

Petrichor wrote:
Idéfix wrote:Here is a new blog that provides more detailed analysis for the above summary: http://vivechana.chaikaapi.com/

The posts that I made on SuCH were made when I was still doing the analysis, so they are harder to read and get a synthesis of my argument. This blog pulls together all the analysis, and maintains a consistent set of comparables (i.e. nine other large states of India to compare Gujarat to, and ten other countries to compare India to) across the different analyses.
I showed the blog to a friend of mine versed in Economics and he had the following points to make:

1. The basic premise by considering income, inequality and hdi is a good start but by no means is it a full picture for comparison purposes. Absolute levels matter and growth from a larger base is more difficult to achieve than from a lower base.
2. The author could have looked at qualitative factors that is earning kudos from the business lobby and international press - these are reductions in corruption levels, higher bureaucratic efficiencies etc. These factors do not necessarily show up in short-term reviews but have longer-term effects.
3. The author could have looked at the recent downturn in the Indian economy (since 2008) and done a year-on-year comparison with how Gujarat fared when the rest of the states were hitting roadblocks. It is easy to show a good report and averages in boom years but difficult to prove how well a state weathers storms.
4. The overall tone of the blog is NOT that of a neutral economist but sounds like someone with an agenda.
5. Fuller analysis of the state's performance done by people like Jagdish Bhagwati cannot be easily trifled with, using this level of basic selective cherry picking analysis.

I realize it is a little unfair when specific rebuttals are not provided but just wanted to lay it out there for you to make improvements.

All the points make perfect sense, and hence, rejected completely by the PiSS group.

by MaxEntropy_Man Sat Sep 28, 2013 3:47 pm

Petrichor wrote:
Idéfix wrote:Here is a new blog that provides more detailed analysis for the above summary: http://vivechana.chaikaapi.com/

The posts that I made on SuCH were made when I was still doing the analysis, so they are harder to read and get a synthesis of my argument. This blog pulls together all the analysis, and maintains a consistent set of comparables (i.e. nine other large states of India to compare Gujarat to, and ten other countries to compare India to) across the different analyses.
I showed the blog to a friend of mine versed in Economics and he had the following points to make:

1. The basic premise by considering income, inequality and hdi is a good start but by no means is it a full picture for comparison purposes. Absolute levels matter and growth from a larger base is more difficult to achieve than from a lower base.
2. The author could have looked at qualitative factors that is earning kudos from the business lobby and international press - these are reductions in corruption levels, higher bureaucratic efficiencies etc. These factors do not necessarily show up in short-term reviews but have longer-term effects.
3. The author could have looked at the recent downturn in the Indian economy (since 2008) and done a year-on-year comparison with how Gujarat fared when the rest of the states were hitting roadblocks. It is easy to show a good report and averages in boom years but difficult to prove how well a state weathers storms.
4. The overall tone of the blog is NOT that of a neutral economist but sounds like someone with an agenda.
5. Fuller analysis of the state's performance done by people like Jagdish Bhagwati cannot be easily trifled with, using this level of basic selective cherry picking analysis.

I realize it is a little unfair when specific rebuttals are not provided but just wanted to lay it out there for you to make improvements.

no economist is agenda less. if that weren't the case there wouldn't be such terms as salt water economists and freshwater economists.

by garam_kuta Sat Sep 28, 2013 3:51 pm

MaxEntropy_Man wrote:
Petrichor wrote:
Idéfix wrote:Here is a new blog that provides more detailed analysis for the above summary: http://vivechana.chaikaapi.com/

The posts that I made on SuCH were made when I was still doing the analysis, so they are harder to read and get a synthesis of my argument. This blog pulls together all the analysis, and maintains a consistent set of comparables (i.e. nine other large states of India to compare Gujarat to, and ten other countries to compare India to) across the different analyses.
I showed the blog to a friend of mine versed in Economics and he had the following points to make:

1. The basic premise by considering income, inequality and hdi is a good start but by no means is it a full picture for comparison purposes. Absolute levels matter and growth from a larger base is more difficult to achieve than from a lower base.
2. The author could have looked at qualitative factors that is earning kudos from the business lobby and international press - these are reductions in corruption levels, higher bureaucratic efficiencies etc. These factors do not necessarily show up in short-term reviews but have longer-term effects.
3. The author could have looked at the recent downturn in the Indian economy (since 2008) and done a year-on-year comparison with how Gujarat fared when the rest of the states were hitting roadblocks. It is easy to show a good report and averages in boom years but difficult to prove how well a state weathers storms.
4. The overall tone of the blog is NOT that of a neutral economist but sounds like someone with an agenda.
5. Fuller analysis of the state's performance done by people like Jagdish Bhagwati cannot be easily trifled with, using this level of basic selective cherry picking analysis.

I realize it is a little unfair when specific rebuttals are not provided but just wanted to lay it out there for you to make improvements.
no economist is agenda less. if that weren't the case there wouldn't be such terms as salt water economists and freshwater economists.

...and both get to go to stockholm:)

by Idéfix Sun Sep 29, 2013 10:35 pm

Petrichor wrote:I showed the blog to a friend of mine versed in Economics and he had the following points to make:

Thanks, here are my reactions.

1. The basic premise by considering income, inequality and hdi is a good start but by no means is it a full picture for comparison purposes. Absolute levels matter and growth from a larger base is more difficult to achieve than from a lower base.

I have shown both absolute levels and growth from there. My arguments and conclusions are not based on comparisons between Gujarat and Bihar or Uttarakhand, or India and the US or Japan. I have endeavored to compare Gujarat to similarly developed states like Tamil Nadu and Maharashtra, and India to similarly developed countries.

2. The author could have looked at qualitative factors that is earning kudos from the business lobby and international press - these are reductions in corruption levels, higher bureaucratic efficiencies etc. These factors do not necessarily show up in short-term reviews but have longer-term effects.

I have consciously avoided qualitative factors like business sentiment, because I wanted to judge the two parties on outcomes.

3. The author could have looked at the recent downturn in the Indian economy (since 2008) and done a year-on-year comparison with how Gujarat fared when the rest of the states were hitting roadblocks. It is easy to show a good report and averages in boom years but difficult to prove how well a state weathers storms.

I have used all the latest available data. I have also incorporated in these charts new data that has become available since I originally did the analysis a month or so ago. For some reason, RBI's handbook does not have the latest data for Gujarat; I am waiting for that to become available, and I will update the analysis when it does.

4. The overall tone of the blog is NOT that of a neutral economist but sounds like someone with an agenda.

When I started writing the blog, I already knew my conclusions. I was not going for neutrality. I wanted to convey my findings which run counter to broadly-held assumptions which in turn were carefully built up with an excellent PR campaign. I was neutral when I started the analysis, and for every metric I analyzed, I fully expected to find NDA outperforming UPA. You can see that from the old threads here which I posted while I was actively performing the analyses.

5. Fuller analysis of the state's performance done by people like Jagdish Bhagwati cannot be easily trifled with, using this level of basic selective cherry picking analysis.

I strongly dispute the notion that my analysis was a selective cherry-picking. Any analysis of economic development outcomes will include the three top-line measures I have chosen. If there are any outcome measures that are comparable in importance to the ones that I analyzed, and if data are available in the public domain for those measures, then perhaps your friend can point out what those are. There can be no dispute about the peers I chose for both Gujarat and India, either. So I don't see why this is cherry-picking at all.

by Kayalvizhi Mon Sep 30, 2013 11:24 am

My point proven. Tamil Nadu should become an independent country.

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