Articles by R Nagaraj

Has India deindustrialised prematurely, after three decades of free market reforms? Probably not. The manufacturing sector’s share in gross domestic product has stagnated, and Kuznetsian structural transformation has stalled. The dispersion and rankings of the major states’ manufacturing employment and output shares have broadly remained unchanged. In the top and bottom 50 districts, the share of manufacturing employment in total employment has remained constant since 1991. Yet, the district-level spatial concentration of employment by industry has increased, and the coefficient of localisation is rising. Thus, the industrial change discernible at the micro level seems too feeble to show up in the aggregate.

Amid (near) jobless economic growth during 2000–12, construction employment boomed at over 9% annually. It was part of a 10 percentage point rise in fixed capital formation rate in 13 years, to 35% of gross domestic product. The boom was rural, growing 2.5 times (at over 12%) as fast as in urban areas (at a mere 5%). National Sample Survey Office primary data reveals that a rise in rural private residential construction is the principal factor explaining the boom. This suggests improvements in rural housing status: conversion of kutcha houses into pucca houses. Decline in price-to-income ratio—of cement to rural wages—expanded rural construction demand. The popular perception (or explanation) for the rural construction employment boom in terms of rural–urban migration—of short-term, circular or seasonal—does not hold water.

The latest quarterly estimates of gross domestic product by the new National Accounts Statistics methodology are once again in the news for the wrong reasons. With inadequate accurate information available on a quarterly basis, the estimates hardly represent the state of the economy and reflect the effects of demonetisation over the October–December 2016 period.

In the new National AccountsStatistics, household (unorganised or informal) sector output for 2011-12 has shrunk by 22% in absolute size, or, by 11 percentage points of GDP, compared to the older series with 2004-05 as the base year. In per capita terms, household sector output as a proportion of GDP in the organised sector has come down from 11% to 7%. A change in the methodology of estimation has been the cause. This article investigates the merits of the new methodology.

In the new National Accounts Statistics, the absolute size of the gross domestic product for 2011-12 is smaller by 2.3% compared to the old series; but the private corporate sector's size is larger by 43%; and, its GDP share higher by 11 percentage points. This is true for the next two years as well. The new estimates are more realistic, claims the Central Statistics Office, as they better represent the contribution of nearly a million "active companies." Critics are unconvinced, however. Seeking to narrow the differences between the competing views, this paper compares the official figures with an alternative estimate for the private corporate sector to gauge the magnitude of (the claimed) improvement, or (the putative) overestimation.