Ranking of major states in india using data envelopment analysis (DEA) approach

Data Envelopment Analysis (DEA), a non-parametric method, is used in this study to empirically measure the relative efficiency of major States in India, where the States are the Decision Making Units (or DMUs). The linear programming technique is employed to rank the 15 major states considered as DMUs in this study. Principal Component Analysis (PCA) is also applied to reduce the data structure and then the same linear programming (LP) technique is applied to the single reduced input and single reduced output. The states are ranked based on the result obtained by the analysis of reduced data and those rankings are compared with the rankings obtained by the analysis of original data. The results of this study showed that the ranking of States based on original data and the ranking of States based on reduced data vary considerably, which indicates that there may exists some inputs and/or outputs, though having less variance, can alter the rankings because of their high sensitivity, when processed using LP technique.