Challenges in Construction of Regional Accounts in India

India is a land of diversity. The disparity among the states in the country, attributable to historical difference in initial conditions, natural resource endowments, level of industrialization and differences in human capital indicators, viz. education, health, etc., not only has manifested in varying levels of growth and development, but are also likely to affect the returns on investment. Regional supply–use frameworks are a tool for planners to help analyse the effect of varying levels of investment and optimizing the use of available resources. But the regional supply–use framework needs to be ‘regionalized’ properly by using local-level information, without which it may lead to wrong inferences. Two important roadblocks, which are faced by the compilers of regional supply–use tables in India, are the vectors on capital formation and trade. Estimates of capital formation at the regional level are not compiled at the regional level due to the absence of state-level data sources as are available at the national level. The national-level estimates are allocated to the states using appropriate indicators. As regards trade, there is a lack of reliable, comprehensive data on the quantity and value of products exported from a state to other Indian states or to other countries. This paper reviews the methods used so far in the available literature and attempts to give some suggestions in this regard, with the help of new/unconventional data sources for the period of 2012–13 to 2014–15 for eight major states of India.