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The ministry of statistics and programme implementation (MoSPI) on Monday held a workshop to dispel doubts over new series of gross domestic product (GDP) data, cautioning users not to compare the headline number in the new series with that in the old one.
"... it is like comparing apple to oranges. It is entirely possible that five per cent growth rate in old series is qualitatively in the same ballpark as 6.5 or 7 per cent in the new series. It is possible. I don't know," chief statistician T C A Anant said in his inaugural address to the workshop.
India's economic growth jumped to 5.1 per cent for 2012-13 in the new series from 4.5 per cent in the old data, while 2013-14 saw the economic expansion climbing further to 6.9 per cent from 4.7 per cent. Advance estimates pegged the growth at 7.4 per cent for 2014-15 and the Economic Survey projected it to be 8.1-8.5 per cent.
What has surprised many economists is that the economy suddenly seem to be growing at comfortable rate, given the dynamics of the global economy. For 2014-15, India turned out to be the fastest growing large economy, equalling China's growth (for 2014) and is projected to expand higher than Chinese in the current financial year. This does not indicated by other indicators such as credit growth, exports growth, industrial growth (barring February figure of five per cent).
It is this hype against which Anant, who is MoSPI secretary, cautioned.
He said the new series of national accounts reflects or represents a series which is structurally very different from the past.
"At this moment, we do not have enough information to be able to give you clearer understanding of long run growth dynamics which emerges in the new series vis-a- vis the past. That exercise we are still working," Anant said.
He acknowledged that the back series will be the one which would be partly assumption-driven.
This is so because the new series has different sourcing of the data.
For instance, he said value added data is available for part of the government sector and corporate sector and until the new series neither of these two segments were captured entirely.
Anant said in the government sector, earlier data used to capture the Central and state governments.
"The big change that we made was that local bodies which we were capturing on a sample basis is now being captured on complete account basis for almosg 60-70 per cent. The work is in progress to extend it to close to 100 per cent. This was a big change, for our government accounting improved enormously," he said.
For the corporate sector, MoSPI and RBI are working closely with ministry of corporate affairs to use data in MCA 21 for national accounts and the data RBI is interested in.
"From 2011-12, we were able to capture 85 per cent of the companies which file returns on this data base," he said.
Earlier, IIP data was used in provisional GDP data. Annual Survey of Industries (ASI) figures were used subsequently after 18 months in GDP data.
Anant said the other shift was in the corporate manufacturing data as figures were used, using enterprise-based coverage against establishment-based approach in earlier series.
" Earlier establishment-based data was better captured in ASI than enterprise- based which was relatively a small sample. Now, with corporate data base, our coverage for enterprise-is almost universal," Anant said.
In the establishment approach, calculation of production is done plant by plant.
On the other hand, in the enterprises approach the activities at headquarters are taken into account. For instance, after an item is produced, various marketing and sales promotion efforts go on at the headquarters level.
In the new GDP data, the establishment approach is used for only small companies as they have a few plants or sometimes a single plant. But, for large corporates, the enterprises approach is used.
Anant said the second area in which a huge change was made is in the use of indicators by which accounts are updated on year-to-year basis. He referred to data on taxes, both Central and states, being used now.
In addition, there were a number of important conceptual changes made that went into this base revision.
One of them is employment figure which enters into national accounts.
In earlier series, employment was taken as a homogenous number which did not differentiate between different categories of jobs such as home-based workers, unpaid workers, workers working for wages.
"In this series, more nuance approach to employment was applied where productivity-based employment figures were used," Anant said
