Mystery of Private Corporate Sector Saving

One epoch-making event in the annals of National Accounts Statistics (NAS) is the revision of the series with base year 2011–12, replacing the series with base year 2004–05, taking into consideration the recommendations of the System of National Accounts (SNA) 2008 as far as possible, and also reviewing the existing databases and methodology. Several sub-committees were constituted for the purpose, and their recommendations were also implemented.¹ Private non-financial corporations (PNFC) are one of the institutional sectors in the revised system—this covers the major sub-sector—private corporate sector (PCS)—comprising non-government, non-financial public and private limited companies. Quasi-corporations (QC) not covered in the erstwhile series are also included in the PCS as per the sectoral classification followed in the NAS 2008. Comprehensive coverage of the PCS using the MCA-21 database of the Ministry of Corporate Affairs (MCA) is also attempted in the new series, as
distinguished from the earlier procedure of using estimates supplied by the Reserve Bank of India (RBI), which were built on the basis of paid-up capital (PUC) blow-up factors from its studies on company finances (hereafter called the traditional method).

A QC is defined in the SNA 2008 as “an unincorporated enterprise that has sufficient information to compile a complete set of accounts as if it were a separate corporation and whose de facto relationship to its owner is that of a corporation to its shareholders.” Thus the PCS has been widened to cover QCs as well, which were earlier included in the household sector (HS). The shift in the PCS database and also the addition of QCs resulted in a hike in the saving rates of PNFCs from 29.3% to 34.5% in 2013–14, with corresponding declines in the saving rates of the HS from 67.3% to 59.4% in the respective years. Against this background, it is necessary to examine the database and methodology of the PCS and QC classifications. The sources for the QC data are the Annual Survey of Industries (ASI) and the quinquennial survey of unincorporated enterprises conducted by the National Sample Survey Office (NSSO). As the sources and uses of the HS are also affected due to these changes, the important issues are how far the information system available from the various sources can be fine-tuned to derive estimates and to what extent the methodology can be relied on to infuse a degree of confidence in the interpretation of the results thrown up by the NAS.