The Ministry of Statistics and Programme Implementation (MoSPI) has proposed adopting “ a mixed approach” for preparing District Domestic Product (DDP) estimates under the new GDP series with base year 2022–23.
The mixed approach is a combination of top-down and bottom-up methods. For sectors where reliable district-level data are available, the bottom-up method is to be used, while for other sectors, state-level estimates are apportioned to districts using the top-down approach. This method balances accuracy and data availability and is commonly used in DDP estimation.
Currently, 26 States and union territories are preparing DDP estimates mainly using the top-down approach through allocation using suitable indicators available at the district level, the statistics ministry said. “However, the indicators used vary across states and across sectors, which limits the comparability of DDP estimates. There is a need to formulate uniform guidelines that provide a conceptual framework for estimating DDP, following a bottom-up approach wherever feasible,” the MoSPI said.
In the top-down approach, state-level aggregates are first estimated and then distributed among districts using suitable indicators. This method can be used when district-level data are not directly available. It ensures consistency with higher-level estimates but may not fully capture local variations. The bottom-up approach involves direct estimation at the district level by collecting data from households, enterprises/establishments and administrative records within each district. District estimates are then aggregated to obtain State totals. This approach better reflects local economic conditions but requires detailed and reliable district-level data.
DDP estimates measure the total value of goods and services produced within a district over a specific period and provide granular insights into the local economic structure and performance of districts. “In recent years, DDP has gained importance as one of the three core indicators for computing the regional Human Development Index (HDI),” the MoSPI said.
To estimate district income, the ministry underlined two conceptual approaches — income originating and income accruing. In the income originating approach, the measurement corresponds to income originating to the factors of production physically located within the geographical boundaries of the district. It represents the net value of goods and services produced within the district as a result of utilising the physical assets and the labour force of the region, even though some of the income might flow to residents outside the region. In contrast, the income accruing approach relates to the income accruing to the normal residents of a district, even though some of it might have originated outside the region.
“Owing to the absence of reliable data on income accruing to residents of the districts, the income-originating approach is being followed,” the MoSPI said.