 "New GDP calculations come with discrepancies")
These discrepancies are not much, but they do show that the break-up of GDP does not match the headline number. For instance, discrepancies constituted only 0.1 per cent of GDP (at constant prices) and 1.2 per cent of GDP (at current prices) for the projections made for 2014-15 by advance estimates, released on Monday.
These inaccuracies could be because the break-up of GDP at market prices (which is a new definition of the GDP) either overshoots the headline number or falls short of it. If the break-up-private final consumption expenditure, gross fixed capital formation, government final consumption expenditure, change in stocks, valuables, and net exports exceed GDP, discrepancies will be negative and if it is less than the GDP, the discrepancies will be positive.
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These were negative by Rs 10,656 crore for the GDP (at 2011-12 prices) for 2014-15. At current prices, these were higher by Rs 1,46,174 crore.
Some times, these change direction and discrepancies turn positive from negative and vice-versa when final numbers come, according to Aditi Nayar, senior economist at ICRA.
National Statistical Commission chairman Pronab Sen has said the ministry of statistics and programme implementation (MoSPI) is working on a supply-side table, which would be a kind of input-output table. Once that comes out, discrepancies would be removed, he said.
"First, the table for 2011-12 will come out soon and then there will be such tables for other years," he said.
In the GDP estimates of advance countries, there are no discrepancies due to this table. Most countries use GDP at market prices.
Before the government moved to calculate GDP at market prices (inclusive of indirect taxes net of subsidies) from the earlier practice of GDP at factor prices (exclusive of indirect taxes net of subsidies), the former was looked at with some suspicion.
In fact, MoSPI had grossly miscalculated growth in GDP at market prices for the first quarter of 2010-11. It was initially put at 3.6 per cent. A day after its release on August 31, 2010, the growth was revised to 10 per cent.
When asked about the data quality of GDP at market prices, a MoSPI official said nobody could rule out human errors, but the quality of data surely improved.
From now on, GDP at factor cost will no longer be there. Instead, there will be gross value added (GVA) at basic prices. The difference between the two is that indirect production taxes net of subsidies are included in GVA at basic prices.
Production taxes are different from product taxes as the former is levied even if final product is not there such as property tax.
In the new way of calculating GDP, the headline number is given at GDP at market prices, while sectoral numbers - agriculture, industry and services - are given in basic prices.