Revising base year of macroeconomic indicators like GDP, IIP, CPI necessary: Govt.

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New Delhi : The Ministry of Statistics and Programme Implementation on May 8, 2019, said that the estimation of GDP in any economy is a complex exercise where several measures and metrics are evolved to better measure the performance of the economy. For the purpose of global standardisation and comparability, countries follow the System of National Accounts (SNA) evolved in the UN after elaborate consultation, it said.

The System of National Accounts 2008 (2008 SNA) is the latest version of the international statistical standard for the national accounts adopted by the United Nations Statistical Commission (UNSC) in 2009 and is an update of the earlier 1993 SNA. The Inter-Secretariat Working Group on National Accounts (ISWGNA) was mandated to develop the 2008 SNA through intense discussions and consultation with member countries. India also participated in the deliberations of the Advisory Expert Group. In its adoption of the 2008 SNA, the UNSC encouraged Member States, regional and sub-regional organizations to implement its recommendations and use it for the national and international reporting of national accounts statistics.

As with any international standard, the data requirements are immense and developing countries take time to evolve the various data sources before they can be aligned with the SNA requirements. In the absence of data, alternate proxy sources or statistical surveys are used to estimate the contribution of various sectors to the GDP/GVA. The SNA also prescribes that the base year of the estimates may be revised at periodic intervals so that changes in the economic environment, advances in methodological research and the needs of users are appropriately captured, the Ministry of Statistics and Programme Implementation said.

Reacting to reports that appeared in a section of the media regarding the usage of data, revisions in the estimates of the Gross Domestic Product (GDP) and associated indicators including the GDP Back-Series, the Ministry of Statistics and Programme Implementation said that with structural changes taking place in the economy, it is necessary to revise the base year of macroeconomic indicators like Gross Domestic Product (GDP), Index of Industrial Production (IIP), Consumer Price Index (CPI) etc, periodically to ensure that indicators remain relevant and reflect the structural changes more realistically.

Such revisions not only use latest data from censuses and surveys, it also incorporates information from administrative data that have become robust over time.  In India, the Base Year of the GDP Series was revised from 2004-05 to 2011-12 and released on January 30, 2015, after adaptation of the sources and methods in line with the SNA 2008. The 2011-12 series of National Accounts Statistics incorporates changes in data sources, expansion in coverage of activities and improvements in procedures that are aligned to the latest recommendations of UN System of National Accounts 2008, to the extent data is available.

There has been an improved coverage of the financial corporations, local bodies and autonomous institutions, all of which have an impact on the estimates of Gross Value Added (GVA). The 2011-12 National Accounts Series also started using the corporate sector data available from the Ministry of Corporate Affairs in its estimates.

The Ministry is also embarking on the 7^th Economic Census for all economic establishments with an aim to not only assessing the nature and distribution of establishments but to also form a National Business Register which can be periodically updated. This will greatly facilitate future establishment surveys undertaken by the central and state governments. The field work for the Economic Census is slated to commence in June, 2019.

India has also subscribed to the Special Data Dissemination Standards (SDDS) of International Monetary Fund (IMF) which requires that macro-economic data would be disseminated within the prescribed periodicity and timeliness conforming to the data standards laid down along with information on the detailed statistical practices or metadata.

Every revision in the estimates of GDP/GVA is based on the data available at the time of the respective release. The coverage and quality of each data source like Revenue expenditure, taxes, company filings data improves over time. According to the World Bank, the accuracy of national accounts estimates and their comparability across countries depend on timely revisions to data on GDP and its components.The Ministry had earlier decided to revise the Base Year of the GDP/GVA and IIP to 2017-18 and steps have been taken to expedite the revision exercise. The Ministry adopts procedures that are in accordance with international standards and the detailed methodology for compilation of the GDP, according to a PIB release.