*Saurabh Garg
Secretary, Ministry of Statistics and Programme Implementation
Gross Domestic Product or GDP measures the size and health of a country’s economy, much like a country’s report card. It indicates the extent to which goods and services are being produced in a country. GDP growth in the conventional sense means the production of more goods and services through business, employment growth and income expansion. GDP also has importance on the global stage. India is currently the fifth largest economy in the world. It is looking to emerge as the third largest economy by 2030.
GDP is – like a tool for evaluating the economy. It needs to be revised regularly to capture the true pulse of the country’s economy. It is possible to adjust to the changing economy only through regular revision of the base year of GDP. Reshaping the economy means the emergence of new industries, changes in purchasing power and the introduction of new statistical formulas. This revision allows for a more accurate and enhanced assessment of government statistics, as well as capturing reality.
After the last base year revision, the new statistical formula helps us to identify sectoral and regional contributions to our GDP more clearly and new methods, for example, the value added by the contribution of the unorganized sector, can be determined through new methods.
During this interim period of the last base year revision, some new statistical sets, such as the activities of various enterprise sectors through data from the Management and Administration Statistics of Companies (MGT-7/7A), business details as per NIC 2008 and the percentage-based production of each industrial enterprise business for each year can be determined. As a result, in the new base year revision, it is possible to obtain the value added by enterprise sectors associated with various activities on the basis of the new MGT-7. What was previously fully identified as a major enterprise. This change allows us to more accurately measure sectoral contribution, thereby clearly depicting the contribution of each business to the economy.
For example, the new company-based statistics are helping us to more accurately measure sectoral contribution. In this new phase, the increased use of GST statistics is enabling us to accurately measure the contribution of the regional sector to a more refined and more accurately measured GDP. This is enabling us to improve the regional distribution of the private corporate sector and better integrate state-wise expenditure measurement. Information that was not available earlier, i.e. annual statistical data from surveys like ASUSE and PLFS, is now helping us to truly assess the annual value added of the unorganised sector. Earlier, their contribution to GDP was accounted for by indirect and other indicators. This new system is important because – this sector involves millions of people in small family businesses, small shops, self-employed workers, who play a huge role in the economy in terms of employment and livelihood.
Base rebasing is not only a new statistical formula, it is also an improvement in the deterministic evaluation system. In this case, the new GDP cycle is being identified as the evaluative growth number.
In the past, double deflation was imposed on the agriculture sector to adjust the GDP to the changed price level. From the new 2022-23 cycle, the scope of double deflation has been extended to the construction sector as well. As a result, the real picture of a single or a set of future uncertainties is being reflected in various other statistical areas. As a result of this approach, our evaluation is becoming much more accurate and reliable with the appropriate use of available statistics. Double deflation is in fact deeply statistical intensive. Its evaluation requires real information on prices in both output and input-based aspects. As more and more of these statistics become available, its use is expanding in other areas as well.
The significant change in the valuation excellence in the economy refers to the total output (in the production sector) on the one hand, and to the workforce and businesses related to it (in the expenditure sector) on the other. These two are often not properly aligned and are reflected as a common phenomenon around the world. In particular, in the quarterly GDP. To shed light on this issue, the new phase is using the ‘Supply and Use Tables’ framework, so that the aspect of inequality is limited to the initial assessment and can be eliminated when the full statistical list is prepared in the final phase.
The revised GDP is like looking at the economy from a new perspective. When each economic activity is properly revealed, their contribution to the development of a small or large country comes to our attention. By using improved statistics, in a refined system and in line with international best practices, the Ministry has developed a more accurate assessment of the economy. For citizens, this means helping them better understand how the economy is working in policy and public service, so that we can feel the pulse of that development not just in the books but in our daily lives.