Assessing the (eco)macroeconomic performance index of India: A data envelopment analysis approach

Abstract

The prime objective of this article is to construct a robust macroeconomic performance (MEP) index of the Indian economy using the data envelopment analysis (DEA) approach. Seven major macro indicators, namely, economic growth, employment rate, terms of trade, inflation rate, fiscal deficit, pollution, and climate change are used to compute MEP and Eco‐MEP indices of the Indian economy from 1980–1981 to 2018–2019. Overall, both the MEP and Eco‐MEP index scores have quite similar best performing years worst performing years, and have also captured the major events that affected adversely the Indian economy during the past decades. The trend in the overall performance of the Indian economy was better in the 1980s and the 1990s but has deteriorated since 2000. The autoregressive distributed lag bounds testing approaches to cointegration methods are used to test the robustness/utility of these indices. The estimated results show that MEP and Eco‐MEP have a positive impact on private investment, foreign investment inflows, foreign direct investment, and a negative effect on the current account deficit. Hence, the suggested composite MEP index is stable, robust and truly captures the economic performance of India. The constructed MEP composite index may be used by foreign investors, rating agencies, private investors, and policymakers for their planning and decision‐making processes.

Tax Collection Efficiency of Indian States: A DEA Approach

“…Unlike other methods of efficiency measurement like Stochastic frontier analysis, it does not impose any parametric assumptions on the data and "it can deal with production processes that have multiple inputs and outputs" (Sahoo and Acharya, 2012;Alm and Dunchan, 2014;Acharya and Sahoo, 2017). So, this method is preferred for measuring comparative efficiency of DMUs (Knechel et al, 2009;Mohanty and Sahoo, 2017). Along with that, DEA is also used to measure efficiency where the inlets and outlets are in money terms (Alm and Dunchan, 2014, Rubio and Barrilao, 2013and Thritle et.…”

Efficiency and Fiscal Performance of Indian States: An Empirical Analysis Using Network DEA

“…Non-parametric frontier estimation techniques were used by Sinha [11,12,18] to estimate state fiscal performance efficiency using outstanding liabilities and gross capital formation as independent variables. Data envelopment analysis was applied to the Indian economy by Mohanty et al [21] to construct a measure of macroeconomic performance (MEP). The study estimated the Indian economy's MEP and Eco-MEP indices from 1980-1981 to 2018-2019 based on macro indicators such as international terms of trade, economic growth rate, pollution, fiscal deficit, employment rate, inflation rate, and climate change.…”