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Thu, Jan 29 2015. 12 34 AM IST
India to change the way it measures economic growth
Central Statistics Office to measure growth by gross valueadded at basic prices, instead of by GDP at factor cost
New Delhi: In a major overhaul of the way India’s gross domestic
product (GDP) is calculated, the Central Statistics Office will start
measuring the country’s economic growth by gross valueadded
(GVA) at basic prices, replacing the practice of measuring it by GDP
at factor cost.
The new measurement under the new base year of 201112,
replacing 200405, will be released on 30 January for three years to
201314.
This is the most comprehensive review of the GDP measurement,
including the sources of data, ever undertaken, said Pronab Sen,
chairman of the National Statistical Commission.
The new method was recommended by the United Nations System of
This is the most comprehensive review of the GDP
National Accounts in 2008 and will make India’s GDP growth
measurement, including the sources of data, ever
numbers comparable with that of developed nations.
undertaken, said Pronab Sen, chairman of the National
Statistical Commission. Photo: Ramesh Pathania
GVA at basic prices will add the net of production taxes and
subsidies to GDP at factor cost. While the change in base year is
likely to lead to a higher GDP, the impact of the measurement change
is unclear.
Stamp duties and property taxes are part of production taxes in India, while subsidies to labour, capital and investment such as apprentice
subsidies and interest subsidies constitute production subsidies.
The Indian economy grew at 6.7%, 4.5% and 4.7% during 201112, 201213 and 201314 fiscal years, respectively. Sen said that along with
GVA at basic prices for these three years, revised measurements for GDP at factor cost will also be provided in the appendix for historical
comparison. Providing GVA growth rates at basic prices historically for earlier years may take longer, he said.
The statistics department will release the advance estimates of the economy for 201415 along with the fiscal third quarter data on 9
February.
The change in base year is being done in accordance with the recommendation of the National Statistical Commission, which had advised
to revise the base year of all economic indices every five years. The new base year has been selected in line with the latest quinquennial
round of employmentunemployment survey.
The new 201112 series will incorporate results of the recent national sample surveys such as enterprise survey (201011), employment
unemployment survey (201112), all India debt and investment survey, situation assessment survey of farmers and survey on land and
livestock holdings (2013). It will also take into account the population census (2011), agriculture census (201011) and livestock census
(2012).
The statistics department will also release Consumer Price Index (CPI) for January with a new base of 2012 next month. The GDP data
revision will also incorporate the new CPI instead of the current practice of using CPI for various groups such as agricultural labourers and
industrial workers. The new series of Index of Industrial Production and Wholesale Price Index are likely to be released by March 2016.
The change in base year of national accounts statistics will result in an increase in the size of the economy in 201314 to `111.7 trillion as
against the earlier estimate of `105.4 trillion, said Devendra Kumar Pant, chief economist and senior director (public finance) at India
Ratings.
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17/11/2016 India to change the way it measures economic growth Print View Livemint
“The 201314 fiscal deficit and current account deficit are likely to decline to 4.3% of GDP (4.6% earlier) and 1.6% of GDP (1.7% earlier),
respectively,” he said.
India Ratings expects the economy to reach $3 trillion by 201920 with the change in base to 201112, it said in a statement. On the 200405
base, it would have happened a year later in 202021.
“Of the last three base year changes, while the size of economy changed significantly in two cases, it did not change much in one case. The
growth impact of a base year change both in India and recently in UK has been minimal,” the rating agency said. “The reason for the
increase in size of the economy is the usage of more uptodate information for these estimations.”
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