New estimate pushes 2013-14 GDP growth to 6.9%


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Jul 13, 2014
New estimate pushes 2013-14 GDP growth to 6.9% - The Times of India

NEW DELHI: The government on Friday revised upwards the GDP growth for 2013-14 to 6.9% from the previously reported 4.7% due to a change in the base year and a new method of measuring the size of the economy.

The latest data released by the Central Statistics Office (CSO) showed the economy grew 5.1% in 2012-13, also up from the previously reported 4.5%.

The CSO said the new base year would be 2011-12 replacing the earlier 2004-05 series. The base year is altered every five years and the change in measure of GDP data is to bring it in line with global standards. In the previous series, growth had slipped below the 5% mark for two consecutive years, a factor that contributed to UPA's rout in the 2014 elections.

"Changes are also made in the presentation of estimates to improve ease of understanding for analysis and facilitate international comparability," the CSO said.

CSO said the new series would ensure comprehensive coverage of the corporate sector by incorporating the annual accounts of companies filed with the corporate affairs ministry.

It would also improve coverage of activities of local bodies in rural and urban areas. Further, incorporation of the results of surveys by the National Sample Survey Organisation (NSSO) would help in improving coverage of the unincorporated manufacturing and services sectors.

"Incorporation of new datasets have resulted in a correction in the level of GDP, which is likely to affect a wide range of indicators where it is used as a reference point: for instance, trends in public expenditure, taxes and public sector debt that are conventionally analysed in terms of their ratios to nominal GDP. It may be noted that the level of revision in the present base revision is not large enough to affect any of these ratios significantly," it said.

The CSO said that henceforth in line with global practices industry-wise estimates will be presented as gross value added (GVA) at basic prices while GDP at market prices will be referred to simply as GDP. The new measure also affects the shares of various sectors of the economy. The share of manufacturing rises while services get a smaller slice of the economic pie.

"It reflects a reclassification of the value addition of different segments of an enterprise. This makes it globally more comparable," said Pronob Sen, Chairman of the National Statistical Commission.

Explaining the change, he said in the earlier method an integrated firm which was in manufacturing and services would have the two activities put into these sectors. Under the revised method the entire value addition for such a firm would count either under manufacturing or services depending on which of them is the primary activity.

Asked whether the changes will push GDP growth in the current year Sen said: Not necessarily."

While Chief Statistician T C Anant did not expect a large impact of the data changes on the current year's fiscal deficit target of 4.1% of GDP.

Former Planning Commission member Saumitra Chaudhuri said the new data reflected a better picture of the economy. "Previously the services sector was overestimated while the manufacturing sector was underestimated. The new data corrects that anomaly," Chaudhuri said.

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