Relationship Between Social Sector and Economic Development in India

This study investigates the relationship between the social sector and economic development across India. Various educational and health indicators were used to construct a Social Sector Development Index (SSDI). Economic development variables such as the growth rate of Gross State Domestic Product (GSDP), gross capital formation, the Human Poverty Index (HPI), the Multidimensional Poverty Index (MPI), and the unemployment rate were employed in the current study. A positive correlation between the SSDI and GSDP growth rate was observed in most states between 1992-1993 and 2005-2006. However, in 2019-2020, the analysis revealed a negative correlation between the SSDI and the GSDP growth rate in most states. The study also found a negative relationship between the SSDI and gross capital formation in most states during the period from 1992-1993 to 2019-2020. Nevertheless, several states-such as Haryana, Maharashtra, Tamil Nadu, Assam, Bihar, Jammu and Kashmir, Jharkhand, Madhya Pradesh, Meghalaya, Nagaland, Rajasthan, Tripura, and West Bengal-exhibited a positive relationship between the SSDI and gross capital formation in 2005-2006. Kerala, Goa, Mizoram, Delhi, Punjab, Tamil Nadu, Maharashtra, and Himachal Pradesh, which recorded high SSDI values and low HPI values, performed better in 1992-1993. Given that economic growth and development are significantly influenced by health and education, the government must take an active role in providing these essential social services.