Revisiting the GDP Estimation Debate

The National Accounts Statistics series with the base year 2011–12 raised controversy on the integrity of the gross domestic product estimates. The revised growth rates are significantly higher than the earlier figures and are out of line with macroeconomic covariates, especially for the manufacturing sector. This article reports fresh evidence on the debate by comparing growth rates of GDP manufacturing with the Annual Survey of Industries for seven years before and after the base year revision.

In 2015, India’s Central Statistical ­Office (CSO)—now National Statistical Office (NSO)—introduced a revi­sed National Accounts Statistics (NAS) series with 2011–12 as the base year. It replaced the earlier one with the base year 2004–05. Periodic rebasing of nati­onal accounts is a routine exercise for government statistical offices everywhere. They elucidate changes in economic structure and relative prices. Reb­asing allows for bringing in newer databases and improved methodologies to represent the ground reality better. The new NAS series has sought to follow the latest international template—the United Nations System of National Accounts (SNA) 2008—replacing the earlier one, SNA 1994. In the first, the new NAS has estimated private corporate sector (PCS) output (gross value added, or GVA) using the mandatory filing of annual financial ret­urns by registered companies with the Ministry of Corporate Affairs (known as the MCA-21 database). The other significant changes are in the informal sector output estimation. These changes are advances in preparing the national acc­ounts, broadly in line with current international guidelines and practices.