The key purpose of developing infrastructure index is to measure the accurately level of infrastructure facilities at the district level (economic and social) at any point in time. This would be used to ascertain the current state of affairs with relation to the potential in a particular area. It provides a measure of 'deprivation' of the relatively underdeveloped from more developed. The index evaluates and captures all types of infrastructure available in the district in the context of the size, urbanization, economic activity and the occupational distribution of the population. For instance, in two districts having the same irrigation infrastructure, the district with a smaller urban population will get a lower weight for this particular infrastructure. Alternatively, the importance of roads in a district surrounded by other districts that also have well developed road networks has to be different from the case where all adjacent districts have poor roads.

The index will reflect the potential of infrastructure development in any particular district based on a statewide standard of infrastructure goals. These will be indexed to 100 and the actual level of available infrastructure will be evaluated periodically. This dynamically changing Infrastructure Index can then be used as an objective measure of improvements in the quality of infrastructure services. Furthermore, the index can be used as a tool for determining the most efficient use of resources available for infrastructure.

The methodology for constructing the index will take into account the fact that the impact of any infrastructure variable has to be sensitive to variations in the economic environment of the district - the nature of economic activity, demographic characteristics, etc.