THE INTERSTATE (ASSAM AND GUJARAT) DIFFERENCES IN THE ENVIRONMENTALLY ADJUSTED GSDP

Environmental issues play a major role in the economic development of a country. It is an indispensable component for bringing about sustainable development. Environmental accounting refers to the compilation of data relating to the environment and natural resources into an accounting framework. The objective of the study is to address the issues of environmental accounting for oil and gas resources in India and particularly for the states of Assam and Gujarat. The present study is both analytical and empirical in its framework. It is based on select states of India, namely, Assam and Gujarat. According to literature on environmental accounting, the current national income measures did not provide adequate indicators of sustainable development of natural resources, as they exclude depletion and degradation of exhaustible resources. As the conventional national accounts neglects depletion and degradation of natural resources, it is necessary to devise an analytical framework to assess the present situation in relation to the need for developing a practical approach which will establish a clear understanding of the relationship about Gross State Domestic Product (GSDP). The empirical analysis is based on the market valuation methods like Net Price Method and User Cost Method. These two methods are used to measure the economic value of natural capital depletion in the petroleum sector. In this study the state level accounts are adjusted by compiling physical and monetary accounts for oil and gas resources and these accounts are then incorporated in GSDP. The analysis presented in the study highlights the interstate (Assam and Gujarat) differences in the Environmentally Adjusted GSDP. The sensitivity of the estimated value to the choice of the methodology used (Net Price and User Cost) is also highlighted. The adoption of basic elements of green accounting will portray sustainability of resources in these states.